Being proactive is one the recipes for success in any facet of life. So, how does one become a proactive investor? What steps will you have to take to ensure the budding venture you back up financially does not turn out to be an unmitigated disaster?
Below, you will learn of the 3 key qualities of proactive investors that you could try to emulate:
1-) Do Thorough Verification
This is a prerequisite to investing carefully in startups and one of the admirable qualities of proactive investors. Doing thorough verification may not be imperative if you are investing a paltry amount. However, if the investment is big, you better cross-check everything. Even better, seek the assistance of a legal expert who can go through all the paperwork on your behalf and see whether everything is in place. There should be nothing amiss in things such as leases and contracts, incorporation, issuance of shares, etc.
The owners of a company may make tall claims about the valuation of their organisation but you can't take them for their word. The veracity of this all-important thing too needs to be checked.2-) Dare To Be Courageous
Startup investors are a daring lot. They do not look for guaranteed returns. They know very well that once they have invested a sum, they will have to forget about it for a year, a couple of years, five years or even a decade. And even after all the wait, they may end up incurring losses or earn little profit.
However, if you are overly cautious, you may never muster the courage to fund any startup. Fortune favours the brave. So, if you have faith in the vision and goals of a newfound entity and are impressed with the headway they have already made, go ahead and offer them the financial support they need.
3-) Meet the Founders
This again isn't a bad ploy. It will require you to make some extra time but if the meeting with the very people who launched the startup you are interested to invest is fruitful, you will be proud of the initiative you took. A personal meeting is always a far cry from an online chat and even a conversation over the phone. You could gauge a lot from the demeanour and body language of the other person.
As you meet the architects of a recently launched outfit, you could assess how committed and passionate they are about realising their dream. If they are indeed gung-ho, they will tell you about the progress they have made, their future aspirations, the corresponding plan of action and all that's lined up in the pipeline.
A meeting like the one discussed above could work wonders and can bring about a significant change in your opinion. It could well be considered mandatory if startup investment is the bee in your bonnet.
The above 3 qualities define a proactive investor and you too must imbibe them if you intend to take a measured approach to investing in startups.