Tips for First-Time Startup Funders

Startup funding

While attracting the right investors for funding is so important for the startups, it is equally important for the investors to be careful while looking to fund for a startup. About a decade ago, the funding scenario for the startups looked completely different. With the development of several new funding options, entrepreneurs have found many ways to get their idea into the sky. Almost anyone can invest into a good startup, only if they play their cards right.

A lot of new, non-traditional funding options have allowed investors to spot sparking ideas and innovative business plans. One of these options came with crowd-funding, which allowed anyone to invest, in return for early access or a product discount.

But, only because so many options are available, doesn’t mean it’s right for everyone. So let’s see what may be right for you:

1) As a first timer, how do you know where to begin? How do you make an investment that would keep you financially secure and earn enough profits in the long run? As much as it seems like a gamble to an untrained eye, you can be smart about where to put your money. Even though many young individuals are opting to set up their own businesses, only a few manage to survive in the long run. About 90% of all the startups fail in the long run. Your goal is not to be on the same trajectory. So make sure each startup you consider goes through an intense screening process, and opt for the best idea under the best leadership.

2) Don’t invest in a startup only because appears to be popular. It is common misconception that what appears to attract a lot of investors is not going to fail. Do your research and establish a deep understanding on why this company may or may not take the fall.

3) While the right investment will bring in a lot of money, don’t bite more than you can actually chew. Investments are a risky business. You either go long or go home. So make sure you are financially secure and make sure you have a backup plan in case things go south. Don’t try to diversify in areas where you have little knowledge about, especially if your budget is tight or you have no advisory body to help to make these decisions.

4) If this is your first time in this field, you may want to hook up to a few websites and platforms that may assist you in this process. For example, Netcapital.com, Indiegogo.com, etc. are a few websites.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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