A. Now if your income is over $100,000 and have a net worth over $100,000, you could invest in startups as an early stage investor. Millions of working class people might try their lucks in this new investment area. Below are 5 questions a recent Wall Street Journal article mentioned that everyone should ask before reaching to the pocket:
1. Could I afford to lose what I invested?
The chance of the failure of a startup is very high, which means the chance of you losing your entire investment is very high. Can you afford losing it entirely?
2. How many investments have I looked into?
Successful venture capitalists screen hundreds of deals before committing to a few startups, how many pitches have you gone through and feel comfortable the one before you is the one to go?
3. Did I do my homework?
We have discussed before the due diligence required when invest in startups, and keep in mind, you are not evaluating a product, you are evaluating a business!
4. Was I overconfident?
Are you overly confident on your investment decision making ability? Do you have a good track record that justifies so or not?
5. What is the exit path?
Success early stage investments typically take at least a few years to exit with a profit. Can you sell your investment in any private exchange or stuck it for as long as it takes to cash out?