What to expect when investing in a company

You could say that investing is like learning to ride a bike: you don't know how to ride it until you get on it and pedal. However, that doesn't mean you can't prepare for it. Here are some basic tips that will help you if you are just starting to invest.

#1 When will I get my money back?

One of the lessons I have learned over the years, after investing in many different companies, is that you cannot be in a hurry. Obviously there are exceptions, but as a general rule, you should expect to wait up to? 10 years to find out what happens to the company. After this time several things can happen, you can get your money back and even multiply it, or you can lose it. That is why it is very important to invest in companies with a business model that is going to be sustained over time and that have something interesting that someone wants to buy.

#2 What can happen?

Investing is "fun" but it is also very dangerous. When we invest in a company we can make a lot of money, but we can also lose it. As I said before, several scenarios can happen: the company does well, we sell our shares and make money; the company does well and we have to decide whether to sell or keep the shares; or the company does badly, goes bankrupt and we lose all the money we have invested.?

#3 What if I invest in a startup?

A few years ago, investors made more profit on investments they made in the public market, in large companies. While this is still happening, today most of the value creation has shifted to investors in early-stage private companies.

When you invest in a startup, you are acquiring a portion of ownership and rights to the future of the startup, known as equity. Investing in such companies has a higher risk than investing in the public market, but the rewards are also greater. It is true that a very high percentage of startups fail and go bankrupt. However, if you choose a winning company, you could make up for the losses caused by the other investments, as well as making a large profit.

They are many different vehicles like the direct investment or the popular SAFE models. Usually it’s the call of the founders what kind of an investment vehicle they offer.?

So remember, although everything can change in this world, before you decide on a company, think: where will you be in 10 years' time, will anyone want to buy you, why, and then invest.

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