Investing is a difficult subject to wade through. There are hundreds, if not thousands, of people every day telling you what stocks to buy, which cryptocurrency is going to last longest, and how real estate is the most lucrative investment. Ultimately, many of these people are not qualified to advise you, just as I am not going to advise you. However, if you are planning on investing in an interesting startup, here are some reasons to invest or to not invest in a startup.
You both have the same values.
Having the same values as the company you are interested in is crucial, and often not surface-level. Goals such as “have our product in Walmart” or “be in every American home” will not tell you much about the process to get there. Is the company going to run ethically, or are they willing to do whatever it takes? Are they willing to give up a chunk of their profit if it goes to a charity they believe in? Will they educate their customers, or are they hoping to trick them into a sale? These are the important questions that you need answers to before you invest.
Money is the #1 priority.
In the age of social media dominance, younger people are constantly comparing themselves to their peers. Many startup founders are young and only looking to make money and show it off. While having the money talk is essential in any business relationship, see if your potential partner is more focused on the product/service, or if they are only after the profits. It is perfectly fine to want to be a billionaire, but you cannot get there unless you put in the effort in other areas.
They reinvent what a business looks like.
Successful companies are successful not only because of the products they sell but primarily because of the people they hire. If Google had subpar employees, Yahoo might be the most-used search engine. One way to attract the best employees is to give them an experience your competitors can’t give them. Flexible hours, a collaborative atmosphere, and a good company culture are all great ways to attract the top people without shelling out too much. Many companies are stuck in old corporate practices, and anyone you partner with should have a plan in place to set them apart.
You would use the product.
This point mainly applies to you if you are in the target demographic for the product. If you are someone who should be intrigued, are you? Early ideas for a product or a service might need to be tweaked, so this is a great time to gauge whether or not the company has the will to change. Try giving your feedback and see what happens. If it gets shut down immediately, you might not want to give them your money.
Although I cannot tell you what to invest in, I hope that you can use these prompts as a starting point for determining whether or not to invest in a startup.