VENTURES AFRICA - Perhaps, investing in stocks and bonds will never be obsolete, as with the right strategy, substantial increment awaits all that invest in the stock market. However, if you have never hit it big in the stock market and you have money to spare, why not take a good look at investing in startups.
Although there is no foolproof – the danger of losing money is ever present, a firm grasp of industry dynamics and the right investment, may guarantee a Google value for your investment.
As 2012 wraps up, with 2013 on the horizon, more innovative technology startups are emerging with hope to solve one problem or the other, and in the process make millions in profits. Thus, If you are going to invest in startups, it should be on middle or long term basis as most startups are not going to start making money until couple of years’ sweat and piecing the right team.
Below are some positives for tech startups in the coming years;
- The Increasing Internet Access: As more people get online in Nigeria, more opportunities open up to serve various needs online. More underground broadband internet cables are being laid than ever and should guarantee cheaper and quicker internet access in the coming years.
- Relative Low Barrier to Entry: Traditional brick and mortar businesses are more difficult to get into but starting a tech business most times will, apart from the startup capital, require only domain, hosting account, little office space and one or two good developers/programmers.
- Relatively Low Employees Needed: I was involved with a startup that had only two full time staff and that consisted of the founders. Many startups get off fine with very few employees and still turn out profitable.
If you really wish to invest in tech startups you will have to know the right questions to ask to determine the profitability of the idea you hope to invest in. Questions like the ones found below will give a potential investor an idea of what to look for in a startup before investing his or her money;
- What Problems Does the Startup Solve or Hope to Solve?
- Are the Problems Big Enough to Create Sustainable Demand and Market for the Startup’s Products or Services?
- Who is the Target Market?
- Who and who is in Their Team?
- How Do They Intend to Market Their Idea?
You may need only to invest between half a million and a couple of millions to get 10 percent – 30 percent stake depending on a number of factors including; how bad the founders need the fund and how good you are with your negotiation.
If you have a couple of millions to spare you can set about seeking out tech startups with potential and investing a couple of hundred thousands. Some investments may turn sour as is a norm with investing. However, a few will turn profitable and get you a decent flow of dividends. Probably one in many will hit it big or go on an IPO and turn you into a happy, rich investor. Take a bold step today.
Remember, nothing ventured, nothing gained…