Investor’s guidebook IV
INVESTING IN STARTUPS ? HERE IS THE ADDED VALUE.
In our investor’s guide series, this time we will emphasize value-added of investing in startups, the sheer satisfaction that has changed the concept of investment economics.
We at ccFOUND call it the democratization of the investment market. Why?
Because we see the virtues of investing in a startup differently than investors that are counting only the return on capital in numbers.
There are non-measurable benefits, inherent in the DNA of a startup, but — fortunately — being increasingly recognized and respected by investors worldwide.
Until now, most private investors did not have access to companies that you invested in, because traditionally, you had to invest in them through venture capital funds. To get into them as an active investor, you had to be on the board and put millions on a table.
The financial world no longer operates in the “vicious circle” and the barrier to entry is eliminated.
What is revolutionary with investing in startups, is the fact that today you can invest as little as a few dozen PLN in one startup, which means that basically everyone has direct access to the company’s life.
The possibility to buy shares in a startup, whether through business angel networks, crowdfunding, investment platforms, or simply in investment rounds issued by the startups themselves, is a great experience in itself.
Another innovation for investors is that lots of people who invest in startups receive a package of knowledge at the entrance, and they take an active part in the rewarding game of business development.
They interact with the startup growth, share the scale of tasks and execution of sales processes, identify regulatory hurdles, study the competition and other aspects of business life.
They have easy and direct access to the founders of the startup, who happily and patiently explain their mission. Previously, the investor had contact with a bank advisor, who in turn had contact with an analyst who had contact with the management of the company whose shares the investor purchased. With the passive investment products such as ETFs, many did not know at all what companies they had in their investment portfolio.
While the old investment formula had its advantages, it took away your chance to influence the creation of a startup’s growth. That’s a unique feature of this kind of assets.
Now things have shortened, you can come to your startup and use your own expertise or own business relationships to support growth and increase startup’s potential.
Some startups that are solving serious problems of the world like ecology, energy solutions that while engaging your own capital and supporting such entrepreneurship turns your life into a spectacular one.
In Poland everything has just started, it is a great time to invest in startups. Some Polish startups are already “chugging along”, achieving significantly higher revenues than the rest.
Half of them do not reach 3 m euro in revenue per year, but they are already exporting products and most of them declare that they are at the stage of product-market proof or expansion and scaling.
What is more interesting, these startups do not reach for funds from state supported hubs, while more often they declare preferences for private funds, business angels or VCs.
If anyone is still weighing whether investing in a startup is a safe investment, let’s finally make them convinced by the interest in startups shown by the big banks.
For the last decade, banks have been calculating what to do with their investment capital, to survive market downturns. Traditional approaches were generating very low income and there was a need to offer assets with higher growth dynamics.
They considered for a time, among others options, entering the FOREX market. It turned out to be too risky.
Discovering new opportunities of the startups investments, banks recognized the benefits of working actively with startups, especially in technology of FINTECH market, allowing banks to access the know-how of startups, increase competitiveness and even structural changes in management, towards an agile way, so characteristic of startups.
Citi was the first bank to establish Innovation Lab in Tel Aviv, Singapore and New York for startups that want to cooperate with.
In Poland, Citi bank recently launched a VC fund to buy only minority stakes.
Startup investments are very modern in their nature indeed.
They democratize the already crumpled schemes of limited access of the investor to the company in which he has invested his capital.
They bring in dynamic operating models and technologies, which has convinced even conservative banks of the added value that this type of investment brings.
In our investor’s guide to the future, we emphasize that the most interesting investments in startups are those that multiply the expected rate of return through an innovative business model.
These include startups that, in exchange for investing in their project, tokenize shares, i.e. issue their own cryptocurrency.
Why are they so special? We will talk about it in the next episode of our investor guide.
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