As with all investing it is important to do your research, it can be a little more tricky with start-ups. Here are a few ways to do your research before investing.
The two private equity platforms we mainly cover are Crowdcube and Seedrs, as they both have a good spread of companies looking for funding.
- Always request access to the pitch information, as it normally explains in more detail what there plan and expected numbers look like.
- Will the company be relevant in 5 years time? most companies take between 3/5 years to exit, so you need to think long term.
- Burn rate is the amount of cash a company goes through, and how long it can run for before needing more funding. Most companies do multiple rounds which can be a great way to increase your share holding.
- What do people think about the company? check reviews(app store, trust pilot, etc), and even a quick google search can unlock some important information.
- A strong team and CEO can go a very long way. Experience and pre existing connections can really help a start up.
These are just a few quick tips, you need to always ensure you are investing an amount that suits your own finances. The money invested is at risk and you do not have quick access to it. Spread out your investments over multiple companies. Do not invest if it doesn’t feel right, only invest when you are confident in the company doing well.
Keep an eye out for SEIS/EIS eligible companies, as you can claim some of your investment back in tax. And finally as stated in my other posts spread out your investments, aim to invest in around 10 companies, as this can help to limit losses.
I have included a link here to sign up to Seedrs https://www.seedrs.com/signup?promo_code=G9HMGVMD . Use this link to get £25 investment credit when you invest over £150.