Start-up investing is fast becoming a trending opportunity for many as several start-ups solving vital problems are on the rise. The question then becomes how does one determine which start-up to invest in.
Investing in a start-up is essentially buying a piece of the company, putting down capital in exchange for equity; a portion of ownership in the start-up and right to its potential profits or losses. This practice helps in generating returns and results, but how do you make the right choice as an investor?
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Determine what type of Investor you are; there are majorly two kinds of investors; Angel investors and Venture capitalist. An angel investor is an accredited individual who uses their own money in small businesses while a venture capitalist is an individual or firm that invests using money pooled from investment companies.
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Choose your niche market; as an investor, it is necessary to identify a distinct industry to play in. There are several start-ups in different sectors to invest in but it is essential to research and determine which sector to support and finance.
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Know the market and trends; market knowledge helps an investor to better know what companies are truly exceptional and stand a chance at winning audience and invariable making profit.
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Ask the right questions; there are never too many questions when making an investment, be sure to ask yourself questions; the why, how and where, also, ask potential investment vital questions to evaluate the company on a more tangible level.
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Have a clear exit strategy; it is important to have the end in mind at the beginning of the investment. Hence, it is advisable to plan how to make profit from the investment.
There are no clear cut ways to ensure your start-up investment is successful but with these, you are on the right path to making the right decision.
