Investing in a startup: how to do it right

The first thing you need to know about startups is that not all of them are long-term profitable and can be very risky investments. I have invested in more than 50 startups and founded some (Tiko is one of them) so I know first-hand that this type of decision requires careful evaluation. As an angel investor, I believe there are a few important things to keep in mind if you are considering investing in a startup.? If you are interested in it, keep reading.

#1 The team

It is important that you know who the founders of the startup are. It is essential that you know who the people behind the project are, as they are the heart of the company. Not only do they have to be clear about the company's objectives and the strategies they will implement to achieve them, but they are also the ones who will define the company's values.

#2 Timing

People first but timing is most likely the single most important reason why startups are successful. 25 years ago,, a new startup came up: Webvan. Online grocery store. What a tremendous idea 25 years ago to start online grocery delivery service. Visionary indeed. They raised hundreds of millions (by the way among others from Sequoia and Softbank)? and back those times, Webvan was the company everybody was talking about. But they started that visionary idea with a very wrong timing: They filed bankruptcy after 3 years of operations. They had a visionary idea, a great team, lots of money but the timing was wrong. Every startup has its own timing and its own stage.?

#3 The business model

The business model is another critical factor to consider before investing in a startup. Look for startups with a business model that is scalable and has the potential to generate significant revenue. The startup should have a clear understanding of their revenue streams, customer acquisition costs, and profit margins.

#4 Traction

Startups that have achieved some level of traction are more likely to succeed. Look for startups that have a clear understanding of their customer base and have demonstrated the ability to acquire and retain customers. It is essential to evaluate the startup's growth rate and the momentum they have generated in the market.

If you have read this far, it means that you are interested in investing but maybe you are not quite sure. Remember that a startup can be profitable but is not always successful; you must carefully study the situation, its strengths and weaknesses, the team behind it, the competition... Once you have everything tied up, enjoy, the exciting part begins.