There are plenty of stories about “garage startups” that in a few years time became billion-euro companies and made their founders and investors billionaires.
If you heard all these stories and wondered “Can I become a startup investor” this article is for you, in this article, we will explain how everyone can become a startup investor from as little as 100 euros.
The answer is yes! Previously only wealthy people and companies were able to invest in startups by buying them, joining angel networks and co-invest, providing funding for venture capital firms, and so on. Basically, earlier you needed hundreds of thousands of euros to start investing in startups, but now you can start investing with as little as 100 euros.
Thanks to equity crowdfunding everyone can now become a startup investor.
Crowdfunding is a form of fundraising where instead of raising large amounts from one big investor, the startup is raising small amounts from many people. It is done via regulated crowdfunding platforms that evaluate startups, manage legal aspects and funds, and make sure that you are provided with all required information according to the law and that your rights are protected.
In simple words now you can go to a crowdfunding platform register in a few minutes, find and choose the startup you want to invest and make an investment starting with as little as 100 euro.
There are a lot of examples of startups whose value grew 1000 times making investors unbelievable returns. But mostly we hear about success stories of startups, but not about failures, and as we all know 9 of 10 startups fail.
To put it in a more practical context if you make 10 investments for 1000 euros, statistically 9 of them will fail and you will lose all your money so that one startup should grow at least 10 times just to compensate for the loss.
Of course, statistics cannot be applied in full since the platform does the evaluation and you will evaluate projects as well, and if you do a great job all 10 investments might turn out successful making you great returns.
I would answer this question like this, if you know the business where you are investing and you have done good research on the team, product, and market, investing in startups might be very profitable.
Otherwise, why do almost all successful entrepreneurs invest in startups?
Investing in startups is no doubt a high-risk investment but let’s break down what risk you should consider when investing.
A risk when investing in startups is not just a failure of the company but also insufficient growth meaning you need to multiply your investments several times to keep the whole your portfolio profitable.
The biggest risk for failure is, that the product is not relevant and no one buys it, to evaluate this risk you need very well understand the product and user needs.
The second risk is the product is not delivered, it could happen due to many reasons technological risk, running out of money, issues with suppliers, regulatory issues you name it, To minimize this risk you need to understand the team behind the startup do they have all required competencies to solve mentioned issues.
The third risk is related to sales. A great product does not mean great sales, the company should have a person who knows how to sell.
Last but not least is a market potential. Is there a big enough market to ensure that the company will grow 10 times or more? To evaluate this risk you need to understand the total addressable market and will the company be to reach it.
Those are just a few risks that startups might face therefore it is very important that you do your research and understand the risks.
Learn more about investing in startups here.
In Europe operates around 100 great Equity crowdfunding platforms, a full list of platforms you may find on Crowdinform.com with platform details and reviews. Let’s review some of them.
The biggest Equity crowdfunding platforms are in the UK Seedrs and Crowdcube. Via Seedrs more than 2000 companies like Revolut, Paysend, TransferGo, and many more have raised more than 2.7 billion GBP and should be mentioned TOP investments on Seeders ensured their investors x50 returns.Crowdcube has also reached astonishing results more than 1.2 billion raised from 1.2 million investors.
Wefunder is a USA-based Equity crowdfunding platform that acquired a European Crowdfunding Service Provider license and opened operations in the Netherlands to provide funding and investment opportunities for European startups and investors.
Companisto is the largest German Equity Crowdfunidng platform with 230 million EUR raised for 328 start-ups.
Mamacrowd is the largest Italian Equity crowdfunding platform licensed under European Crowdfunding Service Provider regulation with more than 200,000 investors and 280 million Euro raised for startups.
NPEX is the stock exchange where you as an investor can buy and/or trade shares and bonds of Dutch SMEs
SeedBlink is an Equity crowdfunding platform from Romania that has raised more than 140 million EUR and has a great platform and wide offering.
Those are just a few great Equity crowdfunding platforms as mentioned you can find more on crowdinfrom.
Every two weeks we publish the list of the hottest startups in Europe you can invest in, therefore follow us to not miss it!
Follow Crowdinform to learn more about crowdfunding and how to invest!
We wish you all the best and successful investing!
