Despite the risks that investing in startups can bring, keeping a few things in mind before investing will help you use your money clearly

Technological startups refer to projects at an early age that, according to Eduardo Morelos, director of Startupbootcamp Fintech Mexico, make use of digital platforms to distribute their product or service exponentially easier and faster.

Leer en español: 5 tips para invertir en startups tecnológicas

Investing in startups is becoming increasingly popular given their high return potential. However, some people refrain from doing so for fear of losing, so it is important to have some things in mind before venturing:

1. Does the business idea respond to any need? It is necessary that before investing your money in this type of projects, you check if the ideas are based on a clear market study with the appropriate research. Ideally, the startup responds to an unmet need with a differentiating product.

2. Meet the work team: A key point is to know the work team that makes up the startup. Usually they are small teams, so the talent and the human factor is very important.

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According to ANGELS, you should take a look at the profile of employees and look for entrepreneurs who perform their work relentlessly, move fast, and are characterized by meeting what they propose to take the business to the next level. Try to make people behind business to have an exciting business culture.

3. What is the market? According to El Economista and Startupxlore, the investor should look at markets that between 4 and 7 years have the capacity to become large enough.

Try to know the sector in which you move:

• What does it consist of
• What possibilities for innovation are there
• How many opportunities are there
• It has a lot of competition or not
• What kind of competition is
• Also, it is important not to stay with a single segment of the market

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4. Diversify the risk: Maybe you see a startup with a great future and want to invest on it all your resources. However, it is important to make these kinds of decisions from the mind and not the heart.

It is advisable to make small investments in several startups and in different business sectors to minimize risk and increase your chances of success and profitability.

In addition to money, try to add value to the startup through your network of contacts and feedback so that your chances of growing increase.

5. Combat impatience: It is important to understand that, at the beginning, a startup needs time to take off economically until the business idea is solid and known to the public. Try to combat the anxiety that losing can generate and seek company and advice in people who have succeeded.

LatinAmerican Post | Luisa Fernanda Báez
Translated from “¿Qué debes tener en cuenta cuando inviertas en startups tecnológicas?”