In our new ‘Guide to Investing’ blog series, we’re taking you through seven steps of startup investing. People who have successfully invested in real estate, bonds, and equity often think they will be successful at investing in startups. However, it’s an inherently different thing. Find out why investing in startups is special and what are the things to consider before investing.
Four things to consider before investing
1. The market is not transparent, and there is no liquidity. You can’t invest and stop investing in a startup whenever you please, so when you make an investment decision, you stick with it for a long time. It could be several years. You need to care, and contribute, during that whole time.
2. Quite often, startup founders who made a lot of money think they’re also great investors. But just because they made a successful business, doesn’t mean they would be successful at investing in startups. Being an investor is totally different from being a startup founder. It is better to see yourself as a novice again, and start to learn from the beginning.
3. A lot of people who start investing in startups invest large amounts – €300,000 here, €200,000 there – without realising that the result of their investment will not be visible for years. Our advice is to start with smaller amounts at the beginning, slowly build up your portfolio and see what type of startup investor you are. Continue investing at a steady rate over several years. Always remember what feels good and what translates into success, and let your portfolio grow in your most successful areas.
4. Finally, surround yourself with fellow investors and listen to their advice. Exchange insights and knowledge as much as you can. Believing you can do everything yourself is a huge trap. You don’t have to agree with other investors, indeed your rarely will, but you are better off keeping open lines of communication.
To learn more about investing in startups, stay tuned for more knowledge.
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