Greetings to my dear readers. Today I will talk in detail about which business projects are best to invest your money to a novice investor and about where to find them. It is also important to pay attention to the area in which the project will develop. Indeed, according to the sad statistics, 70% of all start-up business projects are doomed to failure and blown away in the first year of their work.
Why invest capital in a business
Why do people invest their only money in someone else's business? First of all, for the sake of increasing your capital and receiving passive income in the future. If everything is done correctly, then it will be possible to secure financial independence for yourself at minimal risk for a long time, without putting much effort into it.
In Russia, the investment sphere is not as strongly developed as abroad. And startups are still far behind in development from the level in the US or Europe. Our compatriots in most cases think that investing in start-ups requires huge financial investments. What ordinary people with average income here have nothing to do.
Because of such stereotypical thinking, many people do not even try to become investors, as they initially think that this business is only for rich people. As a result, they only dream of receiving passive income and becoming financially independent people. But do not take any steps to the realization of their dreams.
Believe my personal experience! Everyone has a chance. But for this, you need to do serious work with yourself, slightly alter your thinking, start to be interested in finances and learn more about investment activities in order to learn how to identify promising start-ups from obviously unprofitable.
In the modern world, even those who do not have a large amount as the initial investment capital can become an investor. I will tell you a secret, you do not even need to be an expert and expert in the economic and financial activities of the country.
Advantages and disadvantages of investing in a startup
Like any business, investing in a startup has its own characteristics. Just want to warn you that such a business has one of the highest risks of losing equity.
Therefore, an important component of your activity is risk diversification. Earlier, I already wrote about what it is. In short, this is the distribution of your capital to different projects and different levels of risk and return in order to avoid complete loss of funds in the event of the bankruptcy of one of the projects.
We can single out the main aspects for which people choose to invest in a startup:
- You get the opportunity to participate in the management of the company, to solve important tasks, as well as to influence and change something in its charter.
- You can choose to invest in any area - from robotics to the production of furniture for garden plots. Choose what you prefer. So in the future you will be able to participate in the management of the company, and perhaps your innovations will benefit the business and, as a result, increase your own profitability.
- Even if you do not have so much capital, you can still find a startup that does not require large initial investments.
- You do not need special knowledge and skills in business management. Investment in a startup is simple and affordable. Thanks to this, anyone can become an investor.
- Your potential income has no limits and "ceilings". You can if you want to earn as much as you want.
Despite the fact that such a business has many significant advantages, it still has some drawbacks that influence the decision of many people to avoid such a sphere.
- Investing in startups has one of the highest levels of risk. If it is wrong to make a plan and approach, then it will be possible to lose not only a part of your capital, but also all the investments.
- The direction of startups can be very diverse, sometimes even not entirely legal. They will have some legal restrictions that may limit your activities. This increases the risk. At any time there may be a check that closes your company, and in some cases also imposes a large fine.
- In the case of equity investments, one of the investors may suddenly withdraw their investments. This will directly affect the total profitability of the entire project. And it may even slow him down in development.
- In the case of active investment may require some knowledge and skills.
- Profit is not always stable. Every company has periods of prosperity and downtime. Therefore, the profit of investors will depend on it, respectively, it will not be constant.
- The first profit can be only a few months. Well, before that, the company will be at a loss.
- Not always the initial amount of investment will be sufficient for the development of the company. Sometimes you need additional fees. So be prepared for more spending than previously thought.
To accurately decide for yourself whether to become an investor or not, you must first weigh the pros and cons. It is better to prepare yourself in advance for any outcome, even the most sad one.
Varieties of investments
At first glance, investing may seem simple. I invested money - waiting for return in the form of interest. In fact, this area is very diverse. It can be classified by several parameters.
- By the right of ownership.
Here they share investment in the development of their own business or someone else's. The first option is possible if you have enough money to start a business and all your free time to engage in its development and promotion. Most investors tend to this, but not all of it turns out due to lack of money. It is much more pleasant to run your own business and not to share profits with other participants in the framework of shared investment.
Here you can realize all your ideas. But there is a risk that your knowledge and skills will not be enough to manage the company in the right direction. Well, you need a huge amount of money.
- In terms of investment.
Here it is possible to allocate full and partial financing. In the first case, the entire amount falls on you, and in the second, it is divided into several people. Full investment is most common in the case of creating and developing your own business.
- On a stage of development of the project.
In most cases, investing in startups occurs at the very early stage of project creation. It is at such stages that cash is particularly needed for the creation and further promotion of the company.
But as I mentioned earlier, some projects require investments and when the company already receives the first profit, but still needs funds to develop further.
How to invest in startups - the best exchanges
In the modern world, passive earnings in the form of investing money in startups become especially popular. This is a risky, but a great way to get impressive earnings.
The word "startup" already means the embodiment of new and unique technologies that can change people's lives for the better. After all, the team consists of young promising people with brilliant fresh ideas that can easily turn this world around!
Startup exchanges are a great opportunity to start an investor’s career, even if you do not have enough knowledge and skills. These sites will help you learn how to look at thousands of projects, one that is really promising and will be able to take off in the future and bring you huge profits.
This project has a convenient and comfortable website that brings together creative individuals who can come up with a brilliant idea that can attract investors from all over the world!
Over 7,5, millions of users have already added their projects to the site. Here are the most diverse categories of ideas for startups, not only in the field of modern technology. Music, art, movies, photos and much more. Thus, you can find for yourself the area that will be closer to you.
As part of this project, over 1 billion dollars have already been invested in the development of ideas.
This platform for startups is more oriented for the Russian-speaking audience. The main sphere is business. But besides it, ecology, education, and also creative directions are especially popular.
The most common way to attract investment here is crowdfunding. In addition, startups manage to meet here with partners and potential future investors who may agree to support the business.
The name of this exchange already speaks for itself! It contains truly explosive and promising projects that can be found on the Russian market. Even if you are not going to become an investor, I still recommend visiting this beautiful and modern website, where you will be surprised at the genius of young minds who come up with completely unique projects.
Of course, not all ideas are adequate, but they can amuse you. For example, the creation of soap, which will save you from zombies. And even these startups collect even small amounts as part of crowdfunding.
It is here that many projects have collected millions in their fund to continue the development and implementation of the idea into reality.
If you want to invest only in promising and serious projects, I recommend to visit the site of this stock exchange startups. Here you will have the opportunity to consider truly revolutionary ideas and invest in proven companies that have already proven themselves in the market.
An English-language website where you can try yourself as an investor, as well as thanks to a unique designer to create your own startup. To do this, simply create a project, choose an idea from a ready-made bank, and then simply engage in attracting funds to your company.
Best Directions for Investing in Startups
Overseas investment in a startup has long been in demand. In the Russian market, this sector only began to gain momentum several years ago. And now every year the volume of investment in it grows more and more.
If you decide to become an investor, it is important to choose the right direction, which is more likely to bring you profit and return in the future. Since only on average 20-30% of startups are successful, you need to take the responsibility of choosing a company. After all, it will already be half your future success.
Every year investment directions are expanding. With the development of modern technologies, more and more areas appear in which you can invest your money for the sake of obtaining further benefits.
Unconditional leaders are IT-projects, the energy sphere is a bit behind them. Also, every year, investments in the creation of ecological products and goods are gaining popularity, as this sphere is becoming more and more popular among the population.
This is a diverse and interesting direction, where you can meet a lot of a variety of startups and ideas for further development.
In recent years, especially in demand, as it receives millions of dollars in investment in various projects. People have been working for a long time to make their lives even more comfortable. Therefore, robots are created and improved on which it is possible to shift a part of their duties.
Already, robots are actively being introduced into the industrial sector. Robots in the social sphere are also in high demand. Especially in helping for people with disabilities.
- 3D printer.
This was a real breakthrough in modern technology in recent years. Therefore, projects that are developing new programs to improve this technology are particularly relevant now.
- Devices for health.
Recently, more and more people are beginning to pay attention to health. Therefore, many applications and mobile gadgets began to appear on the market that track your heart rate, blood pressure and many other vital indicators.
There are many apps for smartphones that can be your personal nutritionist or fitness trainer.
At the crowdfunding sites that I listed above, this direction for startups is the most popular and largest in terms of investment.
Analysts and experts assure that in the future their popularity will not run low, but vice versa. Therefore, while there is a demand, you can safely invest your capital in such projects.
- Cloud drives for data storage.
Professional experts predict that in the future, interest in such projects will not run out, but, on the contrary, will grow even more. It is very convenient to store your data in the clouds in the network. At any time you can get access to them from anywhere in the world, having with you only a smartphone and Internet access.
Well, now developers devote more time not to the interface and beautiful delivery, but to the security of data storage in the network. After all, it will be very unpleasant if your cloud drive is hacked by hackers and opens access to personal photos and information throughout the Internet.
- Distance learning.
It is also a very promising direction for investment, which is gaining active popularity in recent times. Therefore, start-ups are increasingly creating programs for distance learning.
According to statistics, the demand today is extremely high, so in the near future new projects will appear with the improvement of the program for distance learning. Therefore, it will be very profitable to invest in such startups.
- Mobile applications for children.
Modern children from an early age know how to use smartphones and tablets. Therefore, special applications that develop children have become relevant. They are created in the form of a game, but include a lot of useful information.
- Online consultation.
Large volumes of investment go into the development of applications that are able to make life easier for people, let us know the answer to any question of interest. But the difficulty for startups is that they have a huge competition. Therefore, you need to try to come up with a program that is unique and does not look like a competitor.
IT technology is the undisputed leader in start-up investment. But also small business is not lagging behind in popularity and demand.
Earlier, I mentioned that people began to worry more and more about ecology and their health. Therefore, the utilization of garbage and waste, which has accumulated a lot around the globe, has become very popular.
To create such a business, you just need to buy or rent all the necessary equipment. In addition to funds from private investors, a waste disposal company can also count on government funding. Since this will go primarily for the benefit of mankind.
Such companies allow you to save a decent amount of money, while obtaining services at a qualitative level.
Information is a powerful tool for promoting modern business. A lot of useful information can be obtained from foreign sites and portals. Well, for this, translators are extremely in demand.
Ways to invest in startups
Suppose you decide for yourself with the scope of investment and even chose a specific project that you think will be able to bring impressive profits. The next step will be to decide exactly how you will invest the money.
There are some of the most popular ways.
For beginners, this is the best way to invest. There are many similar crowdfunding platforms where investors can contribute funds to several projects they like at the same time. This will allow beginners to know in principle what investment in a startup is and to understand the principle of their work and return in the future. Having gained experience, later it will be possible to move on to more expensive (and as a result - profitable) projects.
As for profit, it will be returned to the investor in the form of interest. But it is important to understand that this way of investing is very risky. After all, on such portals few projects will be fully implemented and bring profit in the future.
And even if abroad this way of investing is extremely common, then in our country, even from the point of view of legislation, it has not yet been defined.
So called investors who agree to make large sums of money. In addition, often such people not only help with money, but also with their knowledge and experience. They are actively involved in the development of the company, as they themselves are interested in making great profits. Naturally, such works do not remain without payment. Business angels receive a large share in the management of the project or can completely redeem it in the future.
If the first method does not require the presence of knowledge and skills in the field of business, then here this factor is mandatory.
The investor registers with such clubs, after which he transfers a certain amount to him by filling out a detailed application. Next, the system begins to search for a suitable startup. This approach allows you to save a lot of time looking for a suitable project for investment. In addition, those who do not have sufficient knowledge and experience in finding worthy candidates can be registered here.
But here are the risks. In particular - the unscrupulousness of the club itself. In such high-yielding areas of investment there are also many scammers who fraudulently take the money of their investors.
Venture capital funds
This type of investment is more like a passive. You simply pay a certain commission, and after that highly specialized specialists will do all the work for you. Again, in Russia this method is still poorly developed. Yes, and they will establish extremely tough conditions for their investors. For example, they can set the amount of the minimum contribution in the amount of 500 000 dollars, which not all companies can afford.
Step-by-step instructions for a novice investor
No business sector will generate revenue without a well-thought-out business plan. So here, investing requires a detailed investment plan, which will be spelled out in detail and envisage any scenarios for the development of events, as well as options for getting out of bad situations.
According to statistics, 70% startups become unprofitable in the first year, and 90% - in the second year. And one of the main reasons for this is the lack of a clear plan and leadership that will provide for minimizing risks.
I present to your attention an exemplary instruction that any novice investor should follow.
№1: Search for a suitable business area
Pros know firsthand that it is extremely difficult to find a suitable business area that will bear fruit in the future.
Many people are afraid of the new, the unknown. In the field of investment, you need to forget about this fear. After all, innovative and revolutionary ideas become the most highly profitable projects in the future.
But the difficulty lies precisely in the search for such an innovative project and idea, on which no one has ever worked before.
This is the most profitable option. But if you are still afraid that such innovations will not take root, then you can try something more conservative. But remember about the competition. Always calculate the ratio of supply and demand. If there are a lot of firms providing similar services around, then your company is unlikely to be profitable in such tough competition.
Any business activity in Russia is subject to taxation. Therefore, the next step is to select the appropriate system. I recommend a simplified taxation scheme, which is offered by the state to small businesses. This will significantly reduce costs.
№3: Company Registration
Next you need to decide on the legal form. It will also depend on the size of your capital. Often, small businesses are offered to choose LLC or IP. Which one to choose is up to you. But the PI implies a simplified procedure for registration and subsequent submission of reports.
№4: opening a current account
It is necessary so that your future profit will flow to it. At this stage, you need to decide on the bank that will serve it.
№5: Implementation of your project
Well, after all the preparatory stages you need to proceed to the most important and difficult - the beginning of the activities of your company.
Risks when investing
In any area of investment there are two main participants: an investor and a business owner.
The investor aims not only to invest in business development. He does this with only one purpose - to multiply his own capital.
The company's goal is to find an investor who will give money for business development. So that in the future it will bring net profit.
As you can see, the final goals of the two sides are the same - making a profit. It is only achieved in various ways.
In addition to making a profit, there is a secondary task - to minimize risks! They can be divided into organizational, financial, legal and government.
You can manage risks in the process of the business itself, but you must first specify them in the contract. Pay attention to the business plan, which provides you the owner of a startup. If you are not very well versed in this aspect, then it would be better to hire an independent specialist who will carefully check all sections.
Often, start-up startups, who themselves are not particularly versed in the conduct of business, make serious mistakes in their plans. Sometimes this is done intentionally, in order to inflate profits and interest investors more.
To reduce risks, it is best to invest money in the area in which you yourself understand very well. So you can independently control all actions and prevent any fact of fraud by the business owner. And such cases are in the modern world.
Investments in startups are currently one of the most profitable ways to increase their capital. But I want to immediately warn you that, together with high profitability, this way of earning has high risks that a novice investor cannot always control himself. It is important to pay special attention not only to the selection of the projects themselves, but also to further business. Let many say that specialized knowledge is not always required, but their presence can further reduce risks in such a business. I hope that my recommendations will help you start an investor’s career and become a financially independent person in the future!