Should I Invest in Startups?

Once upon a time, investing in startup companies was a “forbidden fruit” for the average investor. But times are gone when you needed a million to make million dollars. Now you can become a millionaire with a small investment of $2000 even.

Investing in startups is not just easy now, but is highly rewarding too!

For quite some time, investing in early stage startups was not an option for everyone; i.e. unless you happen to be a founder, family member, or close friend of a founder, there were not chances to be involved in very beginning of an exciting new startup.

With the new crowdfunding rules, now early stage investment is available to everyone.  You don’t need to be a wealthy, accredited investor. Rather, you can simply explore some major crowdfunding platforms and invest in startups and ideas that you like most.

Imagine if this was done when Apple or Facebook were early stage startups and you’d have invested a few thousand dollars then! You’d have been a multi-millionaire by now!

Well, Apple and Facebook are not the end of innovation; every day thousands of new startup ideas are born and hundreds make it to the development stage and a few of them are actually something that can be tomorrow’s big things.

So, this is probably the best time to take the opportunity and make a small investment for an outsized return tomorrow!

This is, surely very exciting; but wait!

Startup investments are more of long shots of the investment world. Where you see potential of outsized return, do not forget massive risk associated with all such opportunities.

According to stats, 90% of startups fail, so if you’re new to startup investment, you must take careful steps. As per experts’ recommendations:

  • If you are earning less than $100,000, you must not exceed the cap of $2,000 or 5% of the net worth.
  • If your earnings are over $100,000, you can invest 10% of the income or net worth in startups annually.

Well, that’s not all; as a new investor with no early stage experience you need to know a lot more, i.e. what potential hurdles can be there and how to deal with the same, what are predictable and unpredictable risks and how to minimize them and so on.

Constant learning is the only way to make smart decisions; so if you’re ready to step into startup investment, be ready to learn it first!

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