Why Should We Invest in Startup At Early Stage?
n the world, everyone is more or less interested in becoming rich fast. At a very young age, society taught us to get a degree; then, we have to go to college and make a prestigious degree; and last, of all, get a high-paying job. Why don’t we build a startup? Today I am going to tell you about why should we invest in startup at early stage?
Before going to the main topic, let me ask a question is this the way to get rich? Getting a job doesn’t solve the poverty problem since the amount of income also increases, and so it’s very hard for a person to become financially independent.
Another thing we do when we are employed is we try to make some savings, which is quite a good thing for financial security. Keeping a fixed amount of money is the interest we get from that money is very low, which is a very time-consuming process.
What Is A Startup?
A startup is, knowing what! a startup is not rocket science. So, don’t be confused or frightened. A startup is a company that offers unique products or services with a little amount of money invested that has a lot of potentials to increase in both size and value. You have got a startup idea, but I will like to explain the term in brief.
First of all, a startup usually starts by solving a problem. Imagine there is a problem of getting fresh vegetable’s availability in the market. Some young, aspiring minds have noticed and observed the problem very well.
They also got an idea to solve the problem. They made a device that will preserve the vegetables for a long time without deteriorating the vegetables’ taste and quality.
Initially, they had very little money, and they could also sell their product only to a few people. They also had the scope of developing the product and services, but they could hardly do that because of their limited resources and workforce.
An interesting thing about their idea was they could make a ton of money if they could implement it correctly.
They convinced some people who had some extra money to invest in their business, and with that money, they hired some qualified people. As time went by, they expanded their business, improved products, and generated more revenue. Soon, their company grew more prominent, and their company’s valuation rose bigger.
The story that I have mentioned above explained a startup very clearly. I believe you know more than one company is a startup, but you didn’t realize that these were a startup company. You know the name of Facebook, youtube, Google, Amazon, Whatsapp, Uber, and so on. Amazon was a company that started its journey in a garage, and the rest of the history you know very well.
Why Should We Invest in Startup At Early Stage?
Let’s come to the main topic! why should we invest in startup at early stage? There are several reasons that I am going to explain to you about this matter. Let’s see-
Startups Require Low Investment At The Early Stage
At the early stage of a startup, they need a meager amount of money. The money is often required for building an MVP. Now you may be confused by the term MVP. MVP is the short form of a minimum viable product, and now you may get confused by the term what is a minimum viable product. A minimum viable product is its primary product to see target customers’ reactions and raise fundings from venture capitalists in simple language.
At a very early stage, the co-founders can not collect a lot of money, but they require a low but considerable amount of money. In these cases, those who help are known as angel investors. Angel investors are close people like friends, family, or known acquaintances.
They help entrepreneurs by investing a meager amount of money and also with easy terms. Angel investors are sometimes called seed investors since they provide investment in the company’s seed stage or early stage.
When you are an angel investor, you invest a small amount, but you will get a vast amount of money in a return within a short period; moreover, no point in unnecessary workload and stress about running the business.
Startups Give A Massive Exit
Let’s know what is an exit first. In simple words, Exit means selling the ownership of a company. When you are an angel investor of a company, you invest a small amount of money and receive a fixed amount of equity.
Imagine that you have invested a few bucks on the company as an angel investor. Now the company has grown more prominent, and now the company is valued at 1 million dollars. Now, if you think that you should exit from the business, you can have a tremendous amount of money with you.
Startups Grow Exponentially
Startups can have rapid growth in a short time. If you look at the graph of startup growth over time, you will understand that startups grow very fast.
If you are familiar with the term exponential graph, you can understand the growth of the startup. Within two or three years, the return on investment can become 300 to 400 times.
Limitations Of Investment In Startups
There are risks of investing in startups and which is quite right. Not all the startups that are founded will see the face of light. More than 90% of the startups that are based fail for various reasons, and that is why not all the startup you see will not bring money for you.
If the startup doesn’t become a success, then you have to share the loss as well, which will do nothing but waste your money. In short, not all startups you think will bring money for you is not valid.
Ways To Play Safe!
There are a few ways that can make sure that you can bring good money on your investment.
Make Sure The Idea Is Good
First of all, you have to make sure that the idea is right, and there is a need for the service and product and also a scope of the concept, and to do so, make a swot analysis of the idea. Find out the strengths and weaknesses. Then discover the opportunities and threats. If the idea of the startup is right, then make your investment
Capability Of Founder and Co-Founders
While investing in startups at early stage, the next thing that you have to look for is if the founders and the team are worth implementing the idea. The idea may be right, but what is the point of having a good idea when the team can’t implement the idea.
Secondly, know the co-founders and the team well. Please make sure they are passionate, honest, and dedicated. If any of the qualities is missing, which are mentioned, then don’t make your investment at all.
Invest The Amount That Will Not Affect Your Financial Situation
Never invest everything that you have got in a startup. Investing in startups is indeed very promising, but it’s also true that not every startup will bring you lots of money you expect, which is why there’s no point in investing in every startup you will see. You must think about this point before invest in startups.
Therefore, invest only that amount of money, which will not harm you even if you lose everything in the long run. Make sure that the loss will not harm you in the long term.
Read More About Startups
Reading and gathering pieces of knowledge are always crucial for anything, and when you are talking about startups, this is also very important for everyone. Read as much as you can. Know the opportunities, know about the startup ecosystem; everything will become easy for you. You will quickly get the idea about where to invest and which is promising and which will bring pure money for you.
Keep Positive Company
Keeping an optimistic company is very important for everyone. Suppose you own a company that knows about the startup ecosystem, the right attitude, and also help each other. This makes your investment journey easier for you.
There is a cliché you have heard of is
“We all want to go to paradise, but we don’t want to die.”
I would say that we all want to become rich, but only a few of us are willing to take the risk at the end of the day. This is Why we should invest in startup at early stage.
Life is very much uncertain. There’s no guaranty that you will live tomorrow; the same goes for becoming rich and earning some money. What’s the guaranty of the job you have permanent?
Take calculated risks, study hard, know where the opportunities are, and keep faith in god. Because god’s will is essential, startups are always challenging, but if you are intelligent enough and smart, then you can turn your money into a money-making machine.
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