The Fundamentals Of Startups
Hello again, I’m Kevin Harrington and it’s great to have you back!
Last week we covered a few of the basics when it comes to startup investing — what equity crowdfunding is and a few platforms you can access those juicy startup deals. That’s a great start!
But today I have something unique for you… It’s the four things I personally look for when considering a startup company.
Let’s dive right in:
Communication between you and the startup you’re investing in can make or break your success. This is so crucial — and so basic, especially in terms of a new venture or startup.
Equity crowdfunding is not a one-sided affair. It’s a two-way street between them (the startup) and you (the investor). They will dictate the financial terms — valuations and the equity deal they’re offering. But you possess what they need most — capital (money).
In most cases you’ll be given a full report from startups as you sift through available opportunities. It’s important to look at the overall value of the project. There are risks. I won’t sugarcoat it, but you have to be willing to take a leap of faith.
Which is why I’m always monitoring, researching and asking myself the most important questions when considering a potential investment… To go from beginner to billionaire you’ll need to learn how to read the market and the venture you’re interested in.
Not only must you recognize a good idea from a mediocre one, but you need to get a wider lens on the market as a whole. Find the next trend and you’ll see the potential of a huge payout!
Before you seriously consider investing in a startup on a crowdfunding platform, consider what I personally look for:
- I want to see that there’s some proof of concept.
- If it’s a total startup, pre-revenue, I want to see that there’s some testing before I invest.
- I like to see a good management team, a board of advisers and people behind the company vouching for it.
- I want to see a company that has a serious advantage in a unique and emerging market.
Two out of four of these crucial measures are no good — there’s too much that can go wrong. I only ever keep working on a private deal if the company goes four-for-four with flying colors.
I’ve seen great ideas, potentially booming startups, and yet they come up short. They may have had a great idea, but they didn’t have the execution, and ultimately that’s disappointing, especially when it’s your money on the line.
Here’s what you should be asking the company:
- How are you going to use the proceeds if advanced to you? Why are you raising capital?
- Is it to expand operations?
- Invest in more inventory?
- Hire staff to build the business?
- Buy new operations machinery?
You want to know where their money will be going and to make sure it’s used wisely. Plus, you’ll want to know there’s a concrete plan to pay it back! You as an investor will need a full understanding of how that will work before buying in.
If the startup isn’t clear on their needs and how they’ll use YOUR money, it will be difficult for investors to get behind their plan
The more data — facts, figures and statistics — they can present with their pitch, the better.
This information proves, without a doubt, why their product or service is unique and how it alone solves a particular problem better than any other solution in the current marketplace.
It also shows that they’ve done their due diligence and are well positioned in the marketplace.
I can’t stress this enough: Proof of concept is important.
You want to see that the company has done its research in the following areas:
- The product or service itself
- The industry they’ll specialize in
- The target market including size, demographics and psychographics
- The competition.
So now what? It’s time to get started!
Remember, startup ventures need capital to grow. They NEED you! Before you place any investment, do research on your own and take into account all the equity crowdfunding tips I’ve covered.
There’s always going to be another company, startup, deal or investment, but there’s not always going to be an endless pot of money if you don’t make the right decisions in advance.
Stick with these crowdfunding tips and you’ll have a better chance at potentially amassing a massive windfall!
I love hearing your feedback and questions, so stay in touch! You can email me at AskKevin@SevenFigurePublishing.com.
Sent from a shark,