Following on from the success of startups such as Snapchat and Facebook, investors everywhere are eagerly on the lookout for the next startup that will take the world by storm. Entrepreneurialism is highly fashionable right now and for as many startups as there are looking for investment, there are 10 investors just waiting to part with their cash. Indeed if you are looking for alternative ways of investing money then you could inject some cash into a startup that you believe in and become an angel investor yourself. Before you enter into this world of investment however, there are some things that you should be considering.
Faith in the Project
The first thing that you need before letting any of your money go, is to believe in the project itself. Ask yourself what this business is trying to achieve, what their ethos is and what their future looks like. Nobody can ever truly predict the success of a company but you can get a good idea for it if you actually believe in the project yourself, if you can’t believe in it, how can customers.
Faith in the Team
Very often an angel investor will invest in a team or in individuals, rather than the business idea which is being brought before them. The reason for this is that there are many great managers and leaders out there who may not have struck gold with an idea just yet, but it will only be a matter of tim before they do. Even if you love the business, if it is not being ran by the right people, you shouldn’t invest.
Don’t ever trust the projections of someone that is bringing the idea to you, remember that they are prepared to do whatever it takes to get their business off the ground, including exaggeration. Make sure that you have some experts who you can consult to ensure that the projections and figures are accurate.
Where The Money Will Go
As an investor you need to understand what the company plans to do with the money that you give them, down to the last cent. There can often be some shady goings on with people who are looking for success and you need to make sure that your money will be pumped directly into various areas of the business.
You need to decide how much of a say you want in this business dealings and discuss this with the startup before investing your cash. You may wish to remain a silent partner or you may wish to be a little more hands on, ensure that whatever you wish is built into the contract so that there are no issues at a later date.
Value for Money
Finally it is vital that you work hard to thrash out a great contract for you which will see you well recompensed for your investment and a way in which you can profit should the company find success. Whether it is share options or part ownership that you are after, you need to be forthright with your demands.