Entrepreneurs are potentially innovative people who are capable of changing the world. You could join the revolution by investing in lucrative start-up projects. By partnering with a new exciting venture you could diversify your professional portfolio.

When you invest in a start-up, you own a stake in the company’s business. You could be part of a brand or an outlet of your choice and make returns for your investment as the business prospers.

Why Invest in Start-ups?

Possibility of profits/outsized returns in future

  1. Expand your business portfolio
  2. Get involved in a new field of your interest
  3. Create a back-up option for future

The start-up company can utilize investor contribution to initiate the business operations and gain stability. When you invest in a new venture, you shouldn’t expect a fast return and also should be willing to face the risk of loosing your money in the initial stage. Eventually when the business starts to make profit, you will get a share of it as per the partnership deal. Typically, it will take atleast 3-4 years for a start-up to fetch return of investments. So, if you are planning to participate in a start-up deal be ready to put your money at risk for a while.

Below are a few factors you should check before partnering with a start-up:

  • Analyze and understand the business plan thoroughly
  • Read the company policies and financial documents
  • Learn about the long-term goals and profitability of the business
  • Enquire about the percentage of shares you will get

After the investment is made, you are bound to receive routine updates from the company about the business status.

For those who are keen about investing in start-ups various crowd-funding platforms are available. Crowdfunding platforms help to connect entrepreneurs with investors of all sizes. Investors can find a host of start-up firms ranging from food outlets to tech companies. Some of the leading crowdfunding platforms in India are Milaap, Wishberry, Catapooolt, BitGiving, etc

Angel Investors for start-up

Joining Angel Investing groups is another way of investing in start-ups. An angel investor is someone who invest in business ventures well before the companies possess any revenue or profits. These individuals invest in start-up companies in exchange for convertible debt or ownership equity. The angel investors can also be part of the management committee of the business by providing professional advices as and when required.

SEBI (Securities and Exchange Board of India) has put forward some norms to become an angel investor in India. You should to meet one of the following criteria to become an Angel investor:

  • An individual investor who has net tangible assets of at least INR 2 crore excluding value of his / her principal residence, and who has early stage investment experience, or has experience as a serial entrepreneur, or is a senior management professional with at least 10 years of experience.
  • A body corporate with a net worth of at least INR 10 crore
  • An AIF (Alternative Investment Fund) registered under SEBI AIF Regulations, 2012 or a Venture Capital Fund (VCF) registered under the SEBI (Venture Capital Funds) Regulations, 1996

Indian Angel Network, LetsVenture, Lead Angels, are some of the leading angel networking sites in India.