For some entrepreneurs who have done well with their own businesses, investing in someone else’s startup can be a great way to put something back and to help those who are in the same position that they were once in. There are other reasons too, and if you are a potential investor who can see yourself in one of them, you might be ready to invest in someone else’s brand new business.
You Don’t Want To Miss Out
Getting in on the ground floor with a new business can be truly exciting. This is where it all begins and even the biggest companies today were once tiny startups that needed a helping hand from an investor. If you have seen a company that needs investment and you think that it has potential to become something much bigger, much more interesting, and much more profitable then it might be worth considering an investment so that you don’t miss out.
You Love The Product
Another reason to invest in a startup is that you love the product. Believing in the product means that you will be happier putting your money into a company that makes or sells it, and you’ll also be more willing to give your own opinion and input. Plus, if you love the product, then other people will too. You’ll also be able to show the startup how to find those people and persuade them to buy it.
You Can Have Your Say
Investing at the beginning of a startup’s journey can mean you get preferable rates and you can even have a say in how the company runs (although this will depend on the agreement you sign and how much money you put into it). That’s exciting because if you have a lot of experience in how to manage a business, you can ensure that the new company starts off in the right way.
This could be anything from installing shelters from Shelters Direct in the facility of a start up, to working out the issues in a marketing campaign that just doesn’t seem to be working. Remember, though, that if you are offering your expertise and experience to help, you’ll want a larger share of the equity to repay you for your time and effort.
You Like Risk Taking
Investing in a startup can be risky. There will be no track record of the company succeeding and making money, and it could even be that the owners have never actually run a business before now. That means that your investment is a potentially risky one. For some people, there is a definite thrill in taking a risk (albeit a calculated one) which is present when investing in a startup.
If this is your main reason for put money into a new business, then remember to only invest what you can afford to lose should things go wrong. You can always add more at a later date if it is required and if the business is going in the way you thought and hoped it would but play as safe as possible right at the start.