How To Invest In Startups And Make Money(part 1)




I cover the venture space and my learnings from life as a founder  Opinions expressed by Forbes Contributors are their own.

Investing in startups is trending, but the million dollar question is how to generate outsized returns? This is the big question that I get once I disclose that I lead CoFoundersLab, one of the largest networks of entrepreneurs.

How do you actually make real money?

If you had invested just $10,000 in Amazon, Dell, Apple, or Microsoft, when they went IPO, you’d be a million dollars richer just from that investment according to the IPO Playbook. Apple kicked that 100x ‘Franklin Multiple’ to the curb with a 4,581.7% rise in stock value between 2002 and 2012 alone.

For some of you reading this, $1million may just be chump change. But imagine if you had invested long before the IPO? How would that make you feel right now? What would that do for you?

Even Mark Zuckerberg’s net worth has been trumped by Uber founder Travis Kalanick, at $6B as of 2015. But as a startup investor you don’t have to be the founder, and do all the work to experience viral investment returns.

As a disclaimer, while there are best practices to follow when venture investing, before making money, it is likely that you will lose a bunch. Investing in early-stage startups is truly an art and like leading Venture Capital firm First Round puts it, “there’s no such thing as a formula for success.” But instead of going at it on your own, it does help to leverage investing platforms like 1000 Angels (a company I co-founded) that offers highly curated, direct investment opportunities that are deeply vetted. It takes a lot of the heavy lifting out of venture investing.

However, for some, startup investing has proven to work mind-blowingly well, and many individuals are finding this an absolutely essential financial move for generating the returns and results they crave. So what are the specific advantages of investing in early stage startups? How can you invest in startups too? How do you actually make money doing it, while minimizing risk, and elevating reward potential? How do you pick awesome startup investments?

Four Reasons People Invest in Startups:

1.      Potentially generating uncorrelated outsized returns and provides portfolio diversification

2.      Looking super smart when you're winning startup picks become hot trending topics

3.      The desire to generate enhanced investment returns for their investment portfolio for retirement and beyond

4.      Craving to be involved in driving positive change, bringing new solutions to life