Everyone wants to get rich overnight, a very unrealistic expectation, usually made by rookie investors. There is no easy way of getting rich fast since it is a long and hard process which takes a lot of work. “The American dream” is out there, just not as simple as it is depicted in the movies.
Some people have earned fortunes throughout history by simply being lucky, but you should not rely on luck. Investing in a startup is complicated, much more complicated than people think.
There are many things to consider before doing such an audacious move like buying a startup. Here below, we list some of the most important things you should consider before investing in a startup.
The Expertise Of The Startup Team
If a startup company you have an interest in is led by a professional in the field, it is more likely to be successful in the future. Sometimes the sheer talent of a manager or other team member can lead to incredibly profitable business cooperation.
The example of this is Marc Lore, who was a leader at Amazon and who later started his own company Jet.com. Their startup was bought by Walmart, and Jet became a huge success.
The Technology Used
Modern and innovative technology can often make the difference between a successful startup and an unprofitable one. A good example would be PetSmart who acquired Chewy and made an incredible mix of good product and online delivery.
A good symbiotic relationship with the startup company can be crucial, that is, if you already have a similar business. Nothing is stopping you from acquiring both parts of the coin, especially if you are well-off.
The Platform Built Upon
With the incredible expansion of technology in the past twenty years, there are tons of amazing tech companies who became famous worldwide exclusively thanks to the Internet. The Internet is not just a place for social media, Youtube and video games. It is much more.
It is a giant marketplace, which does not lack in customers either. You can find a select demographic and tailor your product specifically for their needs with a little help of the Internet. Maybe collect some data through social media, place your ads there and voila. You got yourself a bunch of shoppers, who are willing to spend fortunes on your products online.
However, if you want to succeed, you must have a nicely designed website, have a team of programmers who will work out the kinks for you and get the system running.
The Brand Name
Having a good brand name is everything today. I don’t mean just the name, like a catchy slang term, “Buzz” sneakers for instance. I also mean the reputation. If you are acquiring a startup that is already reputable, it is more likely going to be fruitful.
An existent and famous brand can be repurposed, remodeled to become modern and trendy. Today’s trends are changing by the day, but certain experts know how to make products more appealing.
Be Smart About Your Money
Nobody wants to lose money they worked hard for. Neither should you. Investing smartly is the key priority in buying startup companies. There are several ways to be smart about it.
Do not “spray and pray”. Investing blindly can sometimes prove good if you are a lucky person. But, as we mentioned before, you should not rely on luck with your investments.
Strategize and investigate the company you want to invest in. If you are not 100% sure on what you are doing, you can always consult with business agents that help people to make the right decision when they decide to buy a new business.
Spend enough time thinking about your next move. Try to understand the fluctuations in a company’s success. It is even better if you invest in a field you are familiar with. Another smart thing to consider is diversifying your capital. This way you will guarantee to save a portion of money if something goes south.
The above considerations hopefully gave you the grounds to start thinking about what is important when buying a startup. Considering such investment is not easy and it is, without doubt, something you don’t do overnight. Have you thought about investing or buying a startup? Would you add any other advice? Share your thoughts in the comment section below.