Every day I talk to entrepreneurs and top managers who have earned a lot of money and are tired of investing in securities, real estate, or just keeping money in the bank; and most importantly, tired of hearing about success stories and high-profile startup sales, while not understanding what venture capital investment is, how this market works, and how to make a lot of money here.
I decided to make it easy for aspiring business angels and wrote a great guide on venture capital investing, which will leave no questions as to how this market works. In addition to it, I’m sharing startups from the investclub.vc pipeline that an angel investor can start his or her journey with.
What is venture capital investment anyway?
Projects come to us that, for example, make an online store of something. The trouble is, it’s not a startup. A startup is some new product or business model, and the essence of a startup is rapid growth.
Who are the participants in the venture capital market?
You would be very much mistaken if you only name business angels, venture capital funds, and startups. There are many more participants!
What principles does venture capital live by?
Yes, there is a so-called “code” of rules that you need to know and follow from the first investment. Otherwise you can lose all your money and get disappointed in the venture capital market.
What are the stages of startups? What do they make money on?
It may not be obvious what a startup’s value is made of and why they need thousands of dollars of investment and what the team will spend it on.
What steps does the investment process consist of?
Yes, investing in a startup doesn’t just mean giving money and waiting.
First you have to prepare for investment, form an investment focus, find a future unicorn (a startup with a capitalization of more than $1b), do due diligence, sign a preliminary Term sheet, select and sign the investment agreement itself (and you have to choose from a convertible loan, SAFE, KISS or enter the company directly), spell out the terms in the agreement, and finally invest. But that’s not all! After investing, you have to work with the startup and help it not die, and after that, you also have to sell your share to another investor so that you can finally make money.
