Many investors or wealthy people worldwide consider investing to be a game of luck and a game of profit and risk as well. For affluent investors, whether they are companies or individuals, the smart investment for them is the investment that leads to achieving relevant and successful goals in the long term. Hence, investing in startups is always their first choice.
The investor who wants to achieve success is the one who always seeks to make a real difference through his investment projects for himself and the world around him. Investing in startups is about supporting companies that seek through their businesses to make the world a better place to live. At the same time, startups see these investors as people who understand and value what they seek to do.
The relationship between investors and startups is more than just a financial investment or obtaining the company’s ownership. Instead, it is the investor’s entry as a partner in these companies and participation in developing business strategies, not just contributing to financing and capital.
Investing in startups is considered a smart investment in the last two decades, and there are critical factors for the success of investing in these companies, including the following:
Investing in startups – choosing the timing
An investor looking for success wants to invest in startups early, primarily to expand its business and quickly reach global markets. The investor is looking for a company that has already put its products on the market and achieved initial success in its sales, and thus it is heading in the right path.
Some investors may even hire a staff of specialists to analyze and build expectations for startups’ success, and these companies may not carry out this type of research in their early stages due to their weak financial capabilities.
This is beneficial for both parties, as it helps the investor better understand its potential to succeed. It is a good advantage for the startups, given the costs that may result from this type of research.
Investing in startups – company management
The smart investor is always looking for a startup whose management is distinguished by a clear vision, flexibility, and willingness to negotiate. As for the startup’s management, it must be open and ready to accept different views in everything related to the way it is managed, especially if the investor is an expert in this type of business.
For the success of investing in startups, business owners must be humble and willing to accept the opinion of others and not view any proposals as a threat to their future vision. As some of the founders of companies, they expect everything to go correctly later once they succeed. It will become difficult for them to accept the investors’ cues coming to finance and expand their business.
The startup’s management must know well when to stick to its vision and be flexible about new ideas coming from the investor. Many startups have stopped operating after years of success because of their owners’ strict attitudes towards new ideas and visions.
The investor is looking to put his capital in services and products that help the startup turn its vision into real success. Thus, the opportunity to invest in startups requires a lot of research and identification of the quality of the products that they put on the market and how they serve humanity in daily life. It’s not just about profit; it’s about how to make this planet a better place.
Perhaps many of the partnerships between investors and startups failed due to the lack of a long-term approach based on developing products and services that made this investor put a lot of his money into financing these companies. He, therefore, spent his money in the wrong place.
Investing in startups is based on the long-term human aspect and the financial, investment, and research side. This is what the investor should look for in the startups and the products that develop them. If he does not feel satisfied and optimistic about this company, he will not invest in it.
It is not just a matter of putting money into a company, but of smart investment that benefits capital and individuals in the local and global markets.