Things to Consider When Investing in a Startup

Investing in a Startup pic
Investing in a Startup
Image: bankrate.com

With an impressive track record of business leadership and venture investing, Bill Malloy serves as a founding general partner and investor at Sway Ventures in San Francisco, California. In this capacity, Bill Malloy oversees the company’s investments in early-stage & early-growth software companies.

When investing in a business startup, investors should consider several factors, including why they have the opportunity to invest in the startup. Most new companies seek investments simply to raise money. This is not automatically a red flag, but investors should consider that the lack of financing may suggest business struggles.

Further, investors must be aware that many startup investments do not have returns for at least a couple of years. Startups need to funnel any earned money back into the company, so returns may not appear until the business is established.

Investors can reduce risk by investing in markets they know. By investing in familiar markets, investors can better understand a company’s structure and get a more accurate idea of the business’ potential.

However, diversifying is still wise. Multiple investments increase the chance that investors will receive returns on their money.