4 Things You Need to Know Before You Invest in Startups
Investing in startups is a risky business. For every Facebook, there are hundreds of Friendsters that have fizzled into obscurity. Thus, before getting into the startup investing scene and becoming an angel investor yourself, it's important to have a keen understanding of all the risks involved and how you can best mitigate them.
1. STARTUPS HAVE A HIGH FAILURE RATE
New startups have a 50% chance of making it through their first five years. There's no real science for predicting which ones will survive as there are a lot of uncertainties involved in new businesses, but the top three causes for startup failure are: no market need, running out of cash flow, and not having the right team according to this study on the top 20 reasons startups fail.
Because of the high risk nature of startup investments, you should not invest more than you are comfortable to lose.
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| 4 Things You Need to Know Before You Invest in Startups |
