In as much as an investment in a startup is one of the surest investment vehicles one can think of, fact is that this is one of the most risky ventures one can ever get to think of. This is even looking at the fact that when it comes to this, there is no sure checklist for success and the choice of the right company to invest in will call for some deal of experience in the field of investing.
While this happens to be the case, there are some basics that any startup investor needs to learn of and know of so as to be able to have some relative degree of assurance that they will not have had their monies sunk in a failed investment. Here under is a look at some of the due diligence steps and measures that you need to have taken so as to ensure that you are indeed making the best move in so far as making an investment in a startup goes.
Going by what we see in studies and reports and these being as reliable and proved as have been, one thing that any venture capitalist ought to know of when going into any startup investment is that 3 out of 4 of these end up failing. Looking at this fact, it so happens to be a fact that as you consider going into an investment in a startup, you need to have, as a venture capitalist, to have an exit strategy to allow your way out of an investment in a failing startup. Generally speaking, bear in mind the fact that a number of the startups do fail in their first years and as such it would be advisable to think of a way of liquidating your assets so as to bring back the initial investment would be important to ensure you don’t run into the risk of losing that share of your initial investment in the startup. By and large, the reality of the failure rates of startups being so high is one that you ought to live with and appreciate as an investor going for an investment in a startup and as such take the necessary precautionary measures so as to be protected in so far as your interests in capital go, ensure you never lose this bit of your equity.
One other aspect of due diligence that you need to bear in mind and appreciate as you go for an investment in startups is to have your investment going into a brand that is indeed promising. One sure way to take care of such risks as the one mentioned above of failure on your part as an investor is to have your sights trained on a startup that doesn’t just have great products and services to offer the market but should as well be one that has a solid marketing plan for growth, a great team behind them and as well must be having a clear cut market for whatever it is that they have to offer. See more here.