For the most part, investing in start-ups was something reserved for the wealthy or those with a large amount of disposable cash. Fortunately, crowdfunding and other online resources are making these opportunities more readily available to the average investor. If you’re considering using your money to support start-ups, but you’re still not sure if it will be worthwhile, consider the benefits.
Boost Returns on Your Overall Portfolio
It can be a costly mistake to invest all of your savings in start-ups, but diverting 5-10% of your savings to this purpose can be advantageous. This strategy allows you an opportunity to increase your overall gains while reducing the risks of loss through greater diversification. Finance experts estimate that investing 5% of your capital in start-ups can increase growth by 12%.
Fund Your Passion
When you invest in a new start-up, you have the opportunity to get in on the ground floor of a new product or service. You can choose a product that you feel passionate about and use your capital to help that business succeed. Whether your passion is for home security technology or for medical care innovations, you can find a start-up to match your interests. You’ll feel pride in knowing you own a part of the business, so you’ll be able to share in its successes.
Try Impact Investing
Similar to funding start-ups that speak to your interests, impact investing allows you to support companies that share your social, economic, or environmental concerns. In today’s market, many investors are choosing to only invest in the companies that share their concerns. It’s not uncommon for investors to look at the number of female executives in a corporation or research how a company tries to be more energy efficient. Start-ups are aware of these concerns and often issue public statements that address their concerns for contributing to change.
Over the long term, angel investors can maximize their earnings by investing in start-ups while choosing to support the innovations that mean the most to them. This provides an opportunity to grow wealth while doing something good. At the very least, supporting a new start-up will help create new jobs, which will bolster the economy. Investing in start-ups offers an opportunity to explore new and exciting ventures that will also benefit the community.