Startups are the best things for entrepreneurs who get a sense of joy and happiness by investing in other people’s businesses and watching them grow.
If you are someone who is thinking about investing in startups and want to know the initial steps in the process, you are at the right place.
In this short three-minute article, you will get a glimpse of the startup world and understand how to successfully invest in a startup.
I have had the honor to talk with Vijai Bhatti, the CEO of Care As One, a unique online platform for connecting senior care workers and home health care industries. He is an extremely successful serial entrepreneur and startup investor.
In our conversation, we touched upon the topic of startups and I asked him this question that had been in the minds of a lot of people, including me. I asked him how to successfully invest in a startup. The following segment is a short conversation between me and Vijai Bhatti on how he chooses startup companies for his investments.
You are a serial entrepreneur and a successful one at that. You have also been an investor in startups. How do you pick the right startup company to invest in? Tell us something about that.
For one thing, picking the right company is a difficult task. You do not have data or statistics to help you choose or reject a company. It is more about using your entrepreneurial insights and gut feeling. However, certain fundamental aspects can help you in picking companies for startup investing.
Analyzing companies for investment is a process that you have to follow the right way to avoid the risk of losing money. Here are some of the things that I do and you can too.
- Understand the problem that the startup is trying to solve.
You have to fundamentally understand the problem the company is trying to solve. Are there other companies that are trying to solve the same problem? How are they positioned to solve the problem in a better way?
- Analyze the market size.
Figure out the number of people who are going to benefit from this problem being solved. Understand the pace of the market. Is the market growing fast? Is the market shrinking or is it expanding? This will help you in making a decision.
- Look at the team.
The team might be one of the most important things to look at in the early stage of the company. If the team seems strong enough to pull it off, go ahead and make the investment.
There are several startup companies that are coming up. If I am new to startup investments or if I want to invest in startups for the first time, how do I find them?
Here are some of the things you can do:
- Network with entrepreneurs.
Entrepreneurs know entrepreneurs. It is the best way to get access to industries and companies that are looking for investors.
- Go to startup fairs and events.
There are startup fairs and events that you can go to. Entrepreneurs can go to meet investors and investors can go to meet entrepreneurs. You get to connect with a huge network of people who over time may require fundraising.
- Go to sites like AngelList, Seed Invest, and Wefunder.
These are some of the platforms where startup companies list themselves. Startups do Open Public Offerings for a segmented period of time. In this period of time, you can take the opportunity to invest in these companies. Once the companies close this Open Public Offering, you can no longer invest in these companies. Therefore, it is very important to keep an eye on these platforms.