Invest into STARTUP
In the past, it was more difficult to invest in startups because most deals were regional. If you didn’t live in the Bay Area, you didn’t hear about the startups that were looking for funding.
Now, thanks to the Internet, incubators, demo days, and blogs that cover the scene, access to startup funding opportunities are no longer restricted to those who are physically in the room. It’s all about knowing how and where to look for the next big idea.
Here are some places to get you started.
1. Angel Networks.Every major city has at least one angel group that you can join. Sometimes it costs money to join, and their investing philosophy might be different than yours, so you should understand it before you sign on. Once you become a member, the group will meet with startups on a monthly basis and provide you the option to invest in their ideas. One additional benefit of an Angel Network is that the due diligence on a startup is done as a group. If you're just getting into angel investment, this guidance can be extremely helpful.
2. LinkedIn Groups.If you are a member of LinkedIn you can join groups like the Deal Flow Network, the Angel Investor Group or other similar groups that will itemize many startups that are looking for capital. This is also a good opportunity to build your online network by linking directly to people in those groups.
3. Networking Events. Attend entrepreneur events in your area. This is where you get to meet the new startups in town and hear about their businesses in an informal setting. Angel investors also hang out at these events, and they can direct you to other deals. Angels often like to invest together, so connecting with one can lead to additional opportunities.
4. Crowdfunding Sites.Crowdfunding has started to gain popularity over the last year as a way to fund great ideas. The idea is for many people to contribute to an idea to get it funded. If you need capital to fund your idea you could post your project and see if people are interested.Kickstarter and Indiegogo are two sites that are geared toward creative arts and entertainment projects like independent movies or books. Supporting these sites will not get you equity in the business, but it could give you a producer credit and a copy of the final results.
5. Websites.There are a few websites that allow investors the opportunity to look at startups that are requesting capital. Once you find a business you are interested, in you will need to contact the business and work with them on the terms sheet. Make sure your lawyer looks over the details and always do your own due diligence before investing. The two biggest sites in this area areGo Big Network and Fundingpost. They have a diverse range of opportunities, and combing through them is sometimes a challenge, since any startup can list if they pay the fee. Still, there is gold to be found.
6. Startup Incubators.There are great incubator programs out there like Y Combinator, TechStars, 500 Startups,AngelPad and Capital Factory. New ones are popping up every few months. These programs work with selected startups over the course of about three months and then at the end of the program they host a demo day where the startups present their businesses and seek capital. This is a good place to meet entrepreneurs, other angels, and of course, invest in the startups that are presenting.
7. Buy in the Secondary Market. Did you know that you can invest in private companies like Facebook, Twitter and Zynga online? In the past these opportunities did not exist, but recently, two websites have been posting offers to sell shares from insiders whose shares have vested. You can go to Secondmarket or Sharespost and look through the private securities offerings. Most of the postings require you to buy tens of thousands of shares, so if you don’t have $350,000 lying around for 10,000 shares of Facebook, you might be out of luck.
8. Know Your Role. When you invest in a startup, make sure you know what your level of participation will be up front. You might have the idea that you will be able to constantly give advice or your opinion, but that might not be the case. Or, you might want to sit on the sidelines while the company begs you for help in acquiring contacts.
The investment is like a marriage, so make sure it's all spelled out before you sign the term sheet.
Source: mashable.com