How to Invest In Startups – 5 Experts Weigh In

If you invest in the proper startup, you may be able to retire when the company goes public. You may also lose 100% of your investment.

Finding a standard definition for a startup can be difficult and depends on who you ask. A several-year-old and profitable business can be referred to correctly as a startup. A company that has not earned a dollar in revenue can also be considered a startup.

There are also differences between types of startups. A seed-stage venture will look very different from a series E and above. Each company targets various industries and has other end goals.

Before adding startups to your investment portfolio, you must look at several factors. Darren Hazan, a Crowdfunding Expert at DarrenHazan.com, gives three considerations you should consider before investing in startups.

Is the startup building something based on a trend (say smart toilet seats) or a long-term movement (environmental awareness)? Suppose the startup is primarily raising capital due to a popular culture moment that is a reason to tap the brakes on your investment. Cultural trends come and go.

Have the CEO, Founder, Directors, etc., created a startup before, and do they have a track record of success? Have they successfully exited? If this is the founder's first time with a startup, that could be a reason to think twice about the particular company. Investment opportunities based solely on projections without previous success are very high risk, and no security is offered.

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