First, high risks!
Extraordinary return means extraordinary risk, because in a rational investment world, risks and returns always go together. Young companies have high mortality rate, especially during the first 3 years. You should be prepared to lose everything you put in! So never invest more than you can afford to lose.
Second, lack of liquidity
Unlike public companies with stocks traded publicly, it will be very hard for you to cash out your investment in a private company without a big discount to its true value.
Third, long wait
Young companies' businesses are still in forming stage, which means you will likely not seeing dividend payouts anytime soon, and you have to hold your investment in a long time, typically several years or longer.
In our next blog post, we will discuss how to perform due diligence like a venture capitalist.