How Can I Invest in Startups?

You don’t have to be a multi-millionaire or seasoned investor to invest in startups. Thanks to the array of online options available, it’s easier than ever to get started and possibly earn a generous return. Keep reading to learn more about options that may be worth considering, along with benefits, drawbacks, and best practices when investing in startups. 

How to Get Started 

Seven reputable options to consider: 

1. FundersClub

Fundersclub allows you to earn a generous return on your money by investing in some of the most promising startups. As an investor, you’ll know that your money is being poured into ventures that have undergone a rigorous vetting process that includes an extensive review by a panel over 270 seasoned startup professionals, and show signs of promise. 

You should also know that Fundersclub only accepts requests for funding from under 2 percent of the startups they review. So you can rest assured that your investment won’t be in vain. And should you decide to join FundersClub as an investor, you can feel confident knowing that there’s a dedicated team of professionals standing by to assist founders every step of the way, from establishing an effective team to raising subsequent rounds of capital. 

Sounds like an ideal opportunity for you? Complete the online questionnaire found on the FundersClub website to get started.  

2. MicroVentures

MicroVentures prides itself on offering venture capital investment opportunities for the everyday individual. To date, they’ve raised over $220 million from more than 110,000 investors that have used the platform. And they currently boast an impressive portfolio of other 400 investment opportunities that include well-known startups, like Airbnb, Instacart, Kik, Robinhood, and SoFi. You can view their extensive portfolio here

If you’re an accredited investor, you’ll have access to private market investments at both early and late stages. But if not, don’t fret as MicroVentures also offers startup investments to those who are non-accredited. And you may be able to get started with as little as $100. Either way, you won’t have to pay a dime to gain access to these opportunities and start investing. 

Accredited investors can unlock opportunities with MicroVentures by registering online. Not an accredited investor but interested in equity crowdfunding? Check out this comprehensive list of active crowdfunding opportunities. 

3. Republic 

All you need is $10 to become an angel investor through Republic. The platform is free to use and offers opportunities from rigorously screened startups that show tons of promise for investors. What makes Republic even more unique is that they are also invested in the start-ups found on the platform. 

Becoming an investor with Republic is easy. Simply review the company listed on the platforms and analyze key details (i.e pitch and terms) to determine if they’re worth the risk. Narrow down your options and infuse capital into those that you believe have the best chance of becoming profitable. And if you’re predictions are correct, you’ll earn a return on your investment. 

You can start investing today by creating your online account. It’s free to join and it only takes a few minutes of your time. 

4. SeedInvest

SeedInvest is another channel to invest in startups that have been heavily vetted. It’s free to sign up, and all you need is a minimum of $500 to get started. To date, over 250,000 individuals have used the online platform to find startup investment opportunities. 

Interested in joining the SeedInvest family as an investor? Here’s how:

  • Register to become a member using your name and email address. You will also be prompted to answer a few questions to determine if you’re an accredited or non-accredited investor. 
  • Set your investor preferences so the platform can make recommendations. 
  • Review opportunities you’re qualified to invest in and make your final selections. 
  • Start investing at the tap of a button. 

And that’s all there is to it. You can also browse startups in their portfolio before registering as an investor. 

5. Wefunder

Dubbed as the Kickstarter for investing, Wefunder is a crowdfunding platform that allows you to invest as little as $100 in startups with worthy causes. There’s no fee to browse opportunities on the platform and start investing, and there are startups across various industries to choose from.  And to date, they’ve helped startups raise over $55 million collectively.

While there’s a ton of flexibility with Wefunder, there’s a major drawback. Because of the nature of their operation, Wefunder doesn’t vet or endorse companies on their platform. So if you do invest, it’s entirely at your own risk, which is why they suggest you spread your capital out across entities. 

Ready to get started with Wefunder? You can sign up using your name and email or through Facebook right over here

Should You Invest in Startups?

Key Benefits of Investing in Startups 

  • Earning potential. If you happen to stumble upon the next big thing in the startup world, you have the chance to hit the jackpot if you have skin in the game.
  • Social impact. As an investor in a startup that is geared towards doing good in the community, you’ll be playing your part in making a difference. In other words, you can earn a return on your money while contributing to a worthy cause with a positive societal impact. 

Key Drawbacks of Investing in Startups

  • Risk of loss. As with any investment product, you run the risk of losing your capital if the startup doesn’t quite pan out as expected. This is arguably one of the biggest risks associated with investing in startups as the failure rate is exorbitant. Therefore, you should only invest an amount that you can comfortably afford to lose. 

Best Practices When Investing In Startups

Some tidbits of advice when investing in startups: 

  • Pay attention to market trends. Does the industry show promise or is it on a steady decline? Is there a need for the product or service the company is offering? 
  • Conduct extensive research on the company. What insight can you gain about the company’s financial status? Is there a track record of success or are they just starting out? Do they appear to have a healthy company-wide culture? What type of press has been released as of late about the company? 
  • Be sure to diversify your investment. Never place all your eggs in one basket if you want to mitigate the risk of loss. Invest in more than one startup to start. That way, if one fails, you’ll still have a chance to recoup your losses if another one succeeds.
  • Be realistic. As mentioned earlier, your investment shouldn’t be an amount that would tatter your finances if the startup flopped. While you want to maximize your earnings potential, you also want to be realistic by understanding that the failure rate is relatively high, which is why startups are one of the more risky investment categories. 

The Bottom Line

The opportunity to invest in startups is available to just about anyone with cash lying around. But before you commit, understand the risks and refrain from doling out more than you can comfortably afford to lose if the startup tanks or doesn’t perform as expected.