Investing in start-ups appeals to many potential investors as it is not only about getting a fabulous return on investment, but also the feeling of being part of a big success story. A look at these examples will suffice to understand this euphoria:
$1000 invested in 2005 in Facebook went on to be worth $624,500 with ROI of 624.5%
$1000 invested in 2009 in Airbnb grew to be worth about $589,667, an ROI of 589.6%
Many opportunities in start-up investments with potential for amazing results can be identified in the present times. The real challenge lies in finding such great starting airbnb business with a potential to make it big. It is imperative to be able to sense the potential of a new business in its initial stages of existence.
The added advantage of investing in start-ups is emotional satisfaction of helping a new business take root or an innovation converted into a reality. The investor can get involved in the venture with inputs so as to add value if it is in the same domain of his/her knowledge and skills such as real estate or law as analyzing the business model and potential for success is an advantage.
The investors look for certain criteria of the new business seeking funding. They look for realistic financial projections and how the investment amount is going to be spent based on market research and strongly establish a strong return on investment. In short the idea is to pick a company with good growth prospects with solid future returns. With the advent of internet there is a favorable environment for start-ups to seek funding and the opportunities for start-up investments to access the most promising start-up venture.
Finding the next big idea in need of a capital is possible for all investors irrespective of one's location. There are many ways to explore and become knowledgeable and confident about choosing the right start-up venture to invest in.
LinkedIn Groups: Groups in LinkedIn like Angel Investor Group is a good place to start as have a list of potential start-ups needing funds. Developing online relationships with these group members can open the gates for sharing business opportunities and advice thereon.
Angel Networks: Most cities have angel groups that meet with start-ups on a regular basis to assess their potential for profitability. Finding if their investment philosophy matches one's own is essential before joining. The main advantage is the due diligence on any start-up is carried out as a group especially to inexperienced investors.
Crowdfunding websites: For individuals who would rather make investments as part of a group, the idea of crowdfunding is best suited. Other websites showcase start-ups that need funding and for investors to consider opportunities for start-up investments. Investors should ensure the credentials by consulting their lawyer's before making the investment decision.
Events: Events are conducted by networks of investors in many cities from time to time. This is a good opportunity to meet with start-up entrepreneurs. Start-up incubators are programs that work as a platform for investors to meet the start-up entrepreneurs and other angels.
The bottom line is if the new enterprise really addresses a problem in the marketplace and offers solutions it has the potential to succeed and is a good place to invest. Understanding the business concept and ensuring their commercial potential is critical to success in start-up investments.