For some, investing doesn’t take the shape of stocks, shares, or different currencies. Instead, it’s all about putting money into startups and small businesses and seeing a return in that way. Angel investors love investing their money into other people’s companies, assisting them in growing and succeeding and, hopefully, providing a decent return on their investment after a certain period of time.
There are no promises about your return when investing in a startup, just as there are no promises with any investment, but there is something about the idea of helping to bring someone’s dream to fruition that appeals to many. If you’re thinking about becoming an angel investor, here are three questions you should ask before handing over your money.
How Involved Do You Have To Be?
Some angel investors choose to contribute from afar; they invest their money in the company and leave the rest – the running of that company – to those in charge. Others want to be more engaged, such as giving advice or helping when it comes to networking and marketing or showing them the right place to purchase collection agency software. Before you choose which business to invest in, you must first decide if you want to be a hands-on investor or one who just checks in from time to time.
Knowing this will help you in deciding where to invest your money. If you like the look of a startup but they are going to need a lot of your time when you would prefer not to provide it, look elsewhere, and vice versa. You will eventually discover the ideal match, and this is where you should spend your investment money.
What Is the Timeline?
Even with significant marketing and expansion expenditure, the majority of companies require months, if not years, to achieve a consistent level of success. Make sure you understand that this is a long-term investment. However, you should also inquire about the timeline – a competent company owner would have created an exact business plan, which you will need to examine before investing.
The business plan will tell you how much profit the company expects to earn and, more importantly, how long it will take for those numbers to materialize. This will inform you how long it will take to get a return on your investment, allowing you to make an investment decision that works for you.
Is There An Exit Plan?
Whatever kind of company you invest in, whether it’s clothes, vacations, food, cars, services, or anything else, you must have a clear and reasonable exit plan in place. This is particularly important for startups, especially if the market is volatile. An investor will want to know when they will be able to withdraw their money if the numbers don’t pan out as predicted in the business plan.
Before investing any money, an intelligent investor will need to see the beginning, middle, and end of a company set out in front of them. Although altruism is a wonderful by-product of investing in companies, the primary goal is to earn money, and this must be addressed from the beginning.