How to invest in a startup

Hello dear readers!

This time I will take a closer look at another effective investment option. Tens of thousands of people are already doing this and are satisfied. It is modern and beneficial to society. So, today's topic is about how to invest in a startup.

Most people tend to be afraid of something new. Many, simply, do not want to change their life principles, even in small things. Even if the innovations actually provide concrete improvements, simplifications or benefits.

Take the same computer. Many people still use the Window XP operating system, which is outdated both mentally and physically. Imagine it appeared 13 years ago. But, on the other hand, it is familiar and proven - many will say so. And, probably, they will be right, while limiting their computer in functionality.

This happens with other things, with other phenomena. It has always been difficult to implement a new idea. Previously, innovators were persecuted by the Inquisition, but now they are hindered by bureaucracy and public opinion.

But justice still happens. The most persistent make their way, and their idea often becomes a "gold mine". These are the ideas that are startups.

What is a startup

Startup is another term that came to us from the English language. Literally translated as "the beginning of the process." This term is usually used to designate young companies or projects.

And what does young mean? Nobody sets a clear time line. In general, we are talking about business ideas that are implemented in less than a year.

In simple terms, a startup is a preparatory stage for creating a profitable business. The very case when there is an idea, but funds are needed to implement it. The main goal of a startup is to find these funds and become a full-fledged enterprise.

Figuratively speaking, a startup is such a caterpillar. If she eats in a timely and tasty way, then she has the potential to become a butterfly. And if not, then no ????

Successful startups

In the past few years, it has become much easier for startups to find funding. We will look at how this happens a little below. In the meantime, I will give examples of some of the most interesting and successful start-up projects.

1. Alibaba
   Back in 1999, a group of Chinese entrepreneurs came together with a common idea. The group was led by 35-year-old Ma Yong. The idea was to open an Internet platform for organizing trade for small businesses.
   In the first months, things were going very well. Business almost did not go. A year later, stable turnovers appeared, the site acquired regular customers and trusted sellers.
   Five years later, the search giant Yahoo became interested in the company. But Alibaba has retained its independence. As a result, its market capitalization exceeds $ 266 billion, providing jobs for 35 thousand employees.
   In Russia, Alibaba is best known under the Aliexpress brand.

Blah blah blah. Who cares about boring stories about Google and Facebook (yes, they are also startups)? Let's look at small but interesting projects:

Before investing in a startup, you need to find that startup. Fortunately, it's pretty easy now. Again thanks to modern technology.

Crowdfunding

There are a number of special platforms for raising funds for the implementation of startups. Entrepreneurs simply present their ideas and invite investors. Most often, creative, scientific and industrial projects are financed in this way.

The most famous crowdfunding platform is Kickstarter. The site works like a social network, thanks to which you can communicate directly with businessmen. Or you can just watch the presentation of the idea and immediately participate in financing. As a result, the author has a chance to quickly raise money for his project, and investors can be the first to receive a finished product or become co-owners.

At the same time, each project on Kickstarter must undergo moderation. Site specialists select only the most potentially successful projects. In addition, a video should be added to each project, with a quality presentation and information about the benefits for investors.

Kickstarter's audience is so large that many ideas have raised hundreds of thousands of dollars in just the first day. According to Kickstarter itself, the most difficult thing is to collect the first 25% of the amount required for the project. But after receiving them, the probability of full funding is almost one hundred percent.

In addition to Kickstarter, there are other successful platforms where entrepreneurs and investors find each other. Such sites include Kiva, Indiegogo, Zidishа. For example, the Kiva website has already helped 760 thousand entrepreneurs to successfully start their project. The total amount of funds passed through Kiva is already more than $ 300 million. On the sites of Kiva and Zidisha, projects are collected, mainly from developing countries in Africa and the Middle East.

Crowdfunding in Russia and Ukraine

Kickstarter does not yet have a Russian version. This fact is a big obstacle for many domestic investors. But don't be upset. In Russia, there are quite successful analogs of platforms for investing in startups.

The most famous of these is Boomstarter. On the site of this site, you will find a lot of projects. Most of them are creative: recording an album, shooting a film. By the way, you can also invest in the site itself.

In addition, you can find a startup with good potential on the planeta.ru website. The site is rapidly gaining popularity. The total investment in it has already exceeded 314 million rubles. In addition to commercial projects, there was also a place for charity on the site's website.

The largest crowdfunding platform in Ukraine is called “Great Idea”. The site has been operating for several years. During this time, more than five million hryvnias were attracted and 84 successful projects were financed.

Venture investments

You can invest in startups together with investment funds. In addition, the practice is to create so-called pools of private investors. Both funds and pools are looking for promising startups, and then periodically monitor them.

Investments in startups by industry

Interestingly, the very first private investments in the project are called angelic. And the first interested investors - business angels. The fact is that it is the first investors who give the projects the way to life.

As a rule, money is invested in several startups at once. In this way the investment is made. This allows you to balance the profits and smooth out the losses that may arise from a failed project.

Here's an example of how venture capital investments work. In August 2015, the pasprofit project announced the collection of investments. The target amount of funds raised was $ 100,000. Thanks to private investors, this amount was raised in just a month. Moreover, today, at the time of publication of this article, the payment of dividends has already amounted to about 10% ($ 9,700) from investments.

The growth of a startup can be measured by the number of its users or by the amount of its revenue. Sometimes startups postpone the start of their monetization for a while so that they can still be judged by users, not revenue.

Many entrepreneurs have multiple talents. Having created one successful business, they start a second. Investments in new projects by established entrepreneurs are likely to be profitable. Either way, it's always worth evaluating the team of entrepreneurs launching a startup.

The next thing an investor should pay attention to is the transparency of the project and the openness of its creator, the owner of the startup. Working with startups presupposes open communication channels. Communication makes it possible to better understand the potential of the project. At the same time, the closed nature suggests that there are gaps in the project, and perhaps this is a low-quality, and not a startup.

There are start-up projects in many areas. The most promising areas are high technologies, computer games and Internet projects. The least attractive are art.

Thus, investing in startups can be very rewarding. It is very important to find a project with potential. The right choice can make depositors rich in a matter of months. I am sure that in 2016 startups will be one of the most promising.

I would be grateful for your questions or your opinion on how to invest in a startup in comments.

I wish you all a profitable investment!

24.11.2015 16.11.2017

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