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Are you down with start-up fever? [Business Standard]

The risks of investing in start-ups directly are similar to investing directly in stocks vis-a-vis investing in a fund. But in the case of a start-up, risks are greater because the exit route is not as clear, unlike stock market investments, points out Arvind Bansal, head, product and advisory, Avendus Wealth Management.

For many HNIs it is a psychological feeling that they may otherwise miss out on the seemingly easy returns from start-up investments. But, remember that unlike the stock market, in this case either you succeed and multiply your investment or you lose the entire money. Broadly, some of the factors investors must check for include promoters’ background, valuation, clarity on the business model and an exit route.

Proper scrutiny

Clear profit plan

Potential problems

Back-up

Go via angel networks

Avoid crowd-sourcing

In the past three-four years, there has been a lot of support from high net worth individuals (HNIs) and angel investors for start-ups. This has helped new ideas and younger founders, and will drive innovation in this space. But the advice for investors remains the same – be disciplined and don’t place blind bets, Banka says.

Curated from Are you down with start-up fever? [Business Standard]

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Gresham Harkless Jr.

Gresham Harkless is a Media Consultant for Blue 16 Media and the Blogger-in-Chief for CEO Blog Nation. CEO Blog Nation is a community of blogs for entrepreneurs and business owners. Started in much the same way as most small businesses, CEO Blog Nation captures the essence of entrepreneurship by allowing entrepreneurs and business owners to have a voice. CEO Blog Nation provides news, information, events and even startup business tips for entrepreneurs, startups and business owners to succeed.

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