While startup investing tends to have a bad reputation as an investment opportunity due to being a high risk investment, they have a range of benefits unique to early-stage companies.
Entrepreneurs, investors, and researchers alike generally state the early stages of a business to be the most critical in developing a business. Having all your assets concentrated in one company or even one sector can be risky when investing. This is where a diversified portfolio can be helpful.
A diversified portfolio is one where your investments are spread over different asset categories with multiple exciting businesses. Startups provide a solution to this: with new investment opportunities in every sector, they can help ensure stability in the event of an industry-wide downturn affecting a large part of your portfolio.
Experienced investors might back more than twenty ventures at any time, allowing them a stake in a range of growth opportunities.
Startups can also give you an almost unrivalled sense of satisfaction. Investing in startups is believing in a new idea, supporting an entrepreneur’s dreams, and standing behind the development of something you want to see in the world – whether a step forward for sustainability or a new craft beer company.
It might even be a chance for you to make your own investment decisions to support the projects of someone you know personally who has a good idea that you want to back.