Investing in the next big business is the ultimate goal of any investor who is hoping to make some return investment on supporting a great idea. However, finding the ideal investment is not always the easiest thing to do, as is evidenced by the many startup failures that are found each and every year. In order to invest in the next big company, you need to know what to be on the lookout for, and you need to take the signs of a great company into account when evaluating an investment--remember, even if it is something that is right up your alley, you have to look for a sound business over common interests! The following are ten tips for investing in your next company, and if you follow them, your investment is sure to be a big one.
Be Realistic, But Optimistic
Even though your investments need to make sense in today's market, that does not mean that they have to be entirely grounded in a somber attitude regarding the state of financial affairs in order to do well. Remember that even if a company is banking on future interest that that interest is not always just an extrapolation--there could very easily be a market for the startup by launch date; keep an eye on market trends to predict which way to go.
Be Honest With Yourself
A CEO that knows that they are the best will not be afraid of being honest with themselves and others. A company is either a good investment or it is not; it will either meet market needs, or it will not. There should be no convincing yourself where your money is concerned, and it should only go to places that you know it will work for you instead of a financial sinkhole that you only have hopes for.
"Remember, if you cannot afford to lose all of the money you are investing it may not make sense for you to make the investment at all. Trying to find the next big thing is a risky endeavor and odds are most of your investments will not "hit"." Stephen Gurney Viant Group
Make Sure The Business Is Sustainable
Financial crashes in recent years have made the sustainability of businesses more important than ever. You have to know if you are going to be able to collect from the business that you are investing in for the next few years to come. If the business does not look like it will be able to meet market needs for at least the next few years without major modification, skip over it for investing purposes.
Make Sure You Understand The Business
The worst thing an investor can do is just give their money over to something they do not understand completely. You also have to make sure that the price tag of the investment makes sense given the size of the business. If these criteria are not met, then you should favor another investment instead.
If Something Seems Too Good To Be True, It Probably Is
If a business is offering you a whole new way to make money on the market that you have never heard of and can find nothing about when you search for it, the investment opportunity is probably a scam and should be skipped over when you are evaluating potential opportunities.
Invest In Reliable Startups
Startups that are springing up in the tech and healthcare industries are the startups that are most likely to succeed, given the current market demands. If you stick to those two industries, your investments are liable to be sound and give you great returns!
Take The Conversion Rates of Foreign Currency Into Account
Even though shares in businesses may seem more valuable because their simple dollar value is higher, you have to take in to consideration the position of the market that the business is located in in conjunction with the American marketplace; is the marketplace ranked lower or higher? Has it been growing, or has it been shrinking?
Pay Attention To The Business's CEO
If the CEO seems out of touch with reality or just does not rub you the right way, you should probably go with your gut and avoid investing in the startup, even if it seems like a great idea. Great investments are made by people who believe in who they're investing in; if you're doing it just for the product, you're in it for the completely wrong reason.
"For early stage startups, products create initial intrigue in an investors mind, large markets the confidence that there is room to grow or tack if the original product does not gain traction, but ultimately it's the team you are investing in." Salil Pradhan Drapernexus
Look To Invest In An Honest Company
A business with ethos similar to yours makes for the ideal investment, but companies that take the time to treat their employees like people and encourage honest behavior among their managers is going to be a more stable company to invest in than one that has a high turnover rate of employees because of poor communication skills between employer and employee.
Remember That There Is Always Time To Sell Your Stock In A Company
If the investment looks like it might turn downhill at some point, you should have an exit strategy. This does not always mean that you will have a process in place to liquidate all of your assets in a company, but you will at least be able to mitigate your losses.
"Don't forget that it may be quite difficult to sell your private company share,s especially given the limited financial reporting typically provided by private companies. There are some secondary markets such as SecondMarket and Cogent for private company shares but don't depend on them for an exit from the start. If you invested with the understanding that you may never see your invested capital again, this should not be a problem". Stephen Gurney Viant Group