The Washington Magazine

The Washington Magazine

How do investors make money from startups? The answer may surprise you!

You’ve probably heard about people who have made it big by investing in startups. You’ve also probably heard that it’s very difficult to do this, which makes you wonder whether or not you should even bother trying. While making money through investing in startups isn’t easy, it is possible if you know what you’re doing and how to do it right. Here are some of the things that you need to consider when looking at your options as an investor hoping to make money from startups.

What are venture capitalists?

Venture capitalists (or VCs) are people who invest in high-growth companies, often new businesses that have little or no revenue. These are companies that have big growth potential but also present big risks—hence why they need venture capitalists’ help. In exchange for their investment, VCs will own a piece of your company.

Where do VCs put their money

A survey of top venture capital firms found that they are putting more and more of their investment dollars into healthcare startups. From an ROI perspective, it’s not hard to see why—healthcare is a huge and growing industry, with lots of potential for return. Furthermore, many VCs cite portfolio diversification as one of their primary goals in investing.

What is Angel Investment

Angel investment is financial backing for small companies and startups. Typically, accredited angel investors will invest their own personal capital into companies that they believe have high potential for growth, so as to generate a profit down the road. It’s essentially a way for people who have made it in business to give back by providing funding for new, innovative ideas. To learn more about how angel investment works and if it could be right for your startup or small business, read on.

Crowdfunding on the rise

If a bank won’t give a startup an investment, many entrepreneurs are turning to crowdfunding websites like Kickstarter and Indiegogo to raise funds. Over $5.1 billion has been pledged on these sites since they began in 2009. That’s especially good news for startups since these sites democratize fundraising by making it easy for anyone to fund a business they believe in with only a few clicks of their mouse.

Equity crowdfunding in Australia – will it be approved any time soon?

This is a hot topic at present, with an application by Prospaa to run a crowdfunding campaign seeking $5 million being passed on for approval by ASIC (the Australian Securities and Investments Commission) in April 2015. Unfortunately, there has been little news since then – so what’s happening with equity crowdfunding in Australia? Where does it stand now?

Will equity crowdfunding ever happen in Australia? Section: Risks involved with investment Section: Investing advice for newbies

don’t lose your shirt. Section: Learn about opportunities in startup funding, equity crowdfunding and VC (venture capital) Section: Why did Square raise $500 million? Section: Want to invest in ‘unicorns’ like Square, Air BnB and Uber — here’s how.