As an investor, you will always be on the lookout for the next promising thing. The next company that not only excels in having a great idea, but also has the tenacity, drive and ingenuity to stand out and thrive in an incredibly competitive marketplace. This is especially important right now, when any new venture will face many challenges headlong. There are rising costs, rent increases and fuel price hikes. As a result, customers are spending less to weather this cost-of-living crisis.
But these amazing new companies are still out there, no matter what the market does, and they’re going to need your help. There are many different factors you will think about when you want to support a new startup, but one thing you need to think about is how you want to support it. There are several different options you could consider, so let’s break them down.
Be an angel investor
Of course, this option is reserved for those who have a lot of equity. Most startups and entrepreneurs dream of finding the perfect angel investor, the person or company that understands exactly what they are trying to achieve with their business and can provide them with the capital they need to get started . Being a business angel is something that can yield huge dividends. If you are the sole investor, you can largely determine the terms of your investment and profits. However, it is equally important to note that you would bear the entire risk. Even if you find a company that you believe in wholeheartedly, the nature of the market makes it a huge risk. You must think very carefully before taking this step.
Investing in an ICE
One of the most popular ways to invest in startups right now is through an EIS. This stands for Enterprise Investment Scheme, initiated by the UK government to boost investment in start-ups. They did this by giving tax breaks to anyone investing in EIS systems. If you’re looking to invest in EIS programs, you should look to an investment team that has a portfolio of emerging companies in strong sectors like technology and AI. Oxford Capital is a great example of an investment team that works specifically with start-ups in these dynamic industries and they have an EIS guide that breaks down how they work.
crowdfunding
Even if you’ve never invested in a crowdfunding venture, chances are you know someone who has. While crowdfunding is traditionally used to support a charity or artist looking to realize their next project, it has become an increasingly popular way for startups to secure their investment capital. However, it’s important to keep in mind that one of the reasons the startup in question might have gone down the crowdfunding route is that it might not have been able to find its capital the traditional way. If you’re thinking about investing through crowdfunding, you’ll need to do a lot of research to ensure your investment is in safe hands. Find out what their business plan is and request a meeting with the entrepreneurs to find out what their plans are for the future.
Non-Financial Funds
Of course, being part of a start-up’s funding network doesn’t just have to mean financially. If you want to be part of the development of a start-up, you might consider coming on board in a different role. For example, could you use your many years of experience and expertise as a consultant when entrepreneurs take their first steps into the market? Can you offer assistance in finding funding using your professional network? It becomes incredibly difficult for any individual or group just starting a startup. If you could help them avoid some of the biggest pitfalls, it could be almost as important as financial support.
Finally
There are many different ways you can invest in a new startup, but what you need to consider is this: what do you want in return for your investment? Do you trust the people behind the start-up to implement their business plan? Can you afford to lose when things don’t go the way you hope? Any research you can do will help, but it’s also a good idea to look for ways you can make the most of other people’s expertise and minimize the risk to yourself.