Some of the key risks to know before you invest in startups
October 10, 2018
You will not be able to sell, trade, or transfer ownership of your investment for the 12 months following the investment. Even after 12 months, you may not be able to find anyone to buy your share of a company. 0
Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult. You risk overpaying for the equity stake you receive. The class of equity being sold via a crowdfunding offering may have fewer rights than other equity classes issued by a company. 0
Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g. angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans.