Can A Normal Person Invest in Tech Startups?

You might be thinking about investment and there could be tons of questions on your mind. You could be thinking, “How can a normal person invest in tech startups?” If so then you are in the right place.

Understanding how can a normal person invest in tech startups can help you build your wealth. It’s good to know what options are available to you so that you can make the most of them.

Gone are the days when such investment opportunities were limited. Now even a normal person has the opportunity to invest in tech startups. Today you would know how can a normal person invest in tech startups.

Read on for more information.

Investing In The Tech Startups As A Normal Person

There are many platforms that can be of great help when it comes to investing in tech startups. It’s also important that you define what’s a normal person for you. What’s normal in your mind could be rich for some other.

It’s possible that you could be earning enough to invest in a startup and hence, you are looking for ways to build your wealth or it could be your passion.

can a normal person invest in tech startups
can a normal person invest in tech startups

Now that you are curious about how can a normal person invest in tech startups, consider the following:

1. AngelList

You might have heard of AngelList. As a normal person, you can check out the option of a Deal-by-Deal investment at AngelList. The minimum investment here is $1000. It’s for accredited investors so you have to bear that in mind. In order to be an accredited investor, you have to meet the SEC guidelines.

For example, your annual income (individually) has to be over $200k in each of the last 2 years. With a spouse, it has to be $300K. Plus, you should expect the same for the current year also. You can check out the complete list of requirements to see if it’s for you.

This platform is famous, but it’s possible that you might not meet the criterion yet. There are other options too! It’s best to check out the details so that you would know if you are ready for this platform or not.

Also, read, Why Do Most Tech Startups Fail?

2. SeedInvest

SeedInvest is an equity crowdfunding platform. In fact, crowdfunding is gaining popularity, and for the starters, who don’t know what it is! Basically, crowdfunding is a practice through which it’s possible to raise a small amount of money by involving many investors.

You can check out the list of companies that are needing money. Some would accept money from an investor while for others it would be a must that you are an accredited investor. You have to do your research and see what fits you best.

You can ask an expert for financial advice if you are not sure how things work in the modern era of information technology. It’s best if you diversify the portfolio of investment as the chances of failure are high for the startups.

3. Wefunder

You can also check out Wefunder. In fact, through this platform, you can invest as little as $100. You are investing in a company and thus, you would get a return if the company makes a profit. However, you would be at a loss if the company fails. It depends on your choice as to what company you prefer for funding.

The companies here are at an early stage. You might lose all of your money, but there are also chances of a higher return. You can expect to hold the investment for a long term for a return. Because of Regulation Crowdfunding (May 2016), it’s possible for normal people like you to start investing!

According to Wefunder, you should invest in what you understand. In fact, it’s sound advice. What’s the point of investing if you have no idea about a tech startup. Don’t just start for the sake of doing it as everyone else is also participating in the same race.

Check out, What should startup know before seeking funding?

Why You Should Invest In Tech Startups?

You are living in the modern age of information technology. Take a closer look at the world around you. You can find tech startups left and right! It’s high time for the tech startups so investing in such companies sounds like a good idea.

how can a normal person invest in tech startups
Why You Should Invest In Tech Startups

Now that you have some understanding of how can a normal person invest in tech startups, consider the following:

1# A Tech Startup Can Change Your Life

It’s possible that you could be investing in the next big giant. Think about companies like Amazon! What if the tech startup you are interested in investing in can change your life for the better.

2# You Are Supporting A New Idea

You could be supporting a new idea that can even change the world. Who knows you can play a vital role in changing the world for the better! It’s good to have knowledge about the industry so that you would know if the idea has potential or not.

3# Passion Behind The Idea

You have to see what the idea is like plus the team or person behind the idea. At the time there is enough potential in the person or team that makes you think for the better. For example, if you have watched Shark Tank or Dragon’s Den then you would have an idea!

If not then maybe try watching an episode or two to get a gist of what it would be like to be an investor. The dedication of the team and their passion for the tech startup can give you an idea of whether you should go ahead or not. So the passion behind the idea can be your driving force.

4# You Are Supporting A Dream

You are supporting the dreams of a person who has a firm belief in the success of the tech startup. This person could be your relative or a close friend. It’s good to support the potential candidates whether they are from the family or outsiders. Your help counts a lot! Plus, there could be something in exchange for you.

5# Potential to Grow for The Tech Startup

By doing thorough research on the startup, you might know that the company has the potential to grow in the future. Thus, it could be a win-win. It’s best to do good research and if you have no idea you can take advantage of the services of the experts and professionals. You can also ask a relative who has sound knowledge on such matters.

Prepare yourself for investing or funding. If you are investing in the stock market, you are highly dependent on economic factors. Some startups have the potential to grow even when the times are tough! Think about the recent events where you can observe an increase in the online platforms.

6# You Want to Increase Your Wealth

You want every dollar sitting in the bank or idle at home to work for you! You don’t want to waste your money and thus, investing in a tech startup sounds good. It’s good to invest especially if you are not working or need a second source of income.

7# You Are Motivated to Learn

When you are interested in a tech startup, you might feel motivated to learn about the tech industry. Thus, it would be a source of motivation for you! A sense of doing something better for yourself or the world can make you feel special.

8# You Have Savings

If you have extra money then why not make good use of it, who knows you can get profitable returns in the future. It’s best to make use of your savings. What’s the point of money lying around when you are not making the right use of it.

9# You Can Build Meaningful Connections

Investing in tech startups can help you build meaningful connections. When you are investing in a tech startup, you can meet new people. It’s possible that you can get the opportunity to become a mentor.

10# You Are Diversifying Your Portfolio

You don’t have to invest all your money in one startup, you can diversify your choice. You can invest in multiple startups and thus, it can be a win-win.

11. You Are Participating In The Growth of Economy

When you are investing in a tech startup, you are participating in the growth of your economy. If there is a new and successful company on the market, it would be offering jobs to the public.

Read: How to get funding for startup without giving up equity

Tips to Keep In Mind When You Are Investing In Tech Startups As A Normal Person

Keep the following tips in mind when you plan on investing in tech startups:

how can a normal person invest in a tech startup
how can a normal person invest in a tech startup

Do Your Research

It’s better to do thorough research before investing in a tech startup. You can ask an expert to guide you if you have no idea! If you have no idea about the company or the industry then how you would know if you are making the right decision.

It’s best to gain some insight before you make a final decision. Find as much information as you can about the tech startup. Research online and ask relevant questions.

Diversify Your Portfolio

Don’t put all your life savings in one place especially if you are depending on your savings. If you are not diversifying your portfolio, you are keeping all your eggs in one basket. Think about it, what if the basket falls!

Keep An Open Mind

You have to invest with an open mind. Just like there are chances of success, you can lose too! Some investments can be highly risky while for others there could be a chance of a refund. You have to do your own thorough research for the risk involved.

You Might Have to Wait Years for A Return

When you are investing in a tech startup, your money would be tied up for a few years. On the other hand, other investment opportunities can offer liquidity. You have to bear in mind that when a company is recently launched, it would take some time to gain momentum. Think of it like a baby, you can’t expect the baby to walk or run before the time is right.

You have to allow enough time for the startup to grow. If you don’t have the patience then it’s not for you. When you are investing in a startup, it requires your time and commitment so you have to bear patience. If you are ready for it then it’s for you!

Offer Mentorship

It’s possible that you might have invested your savings in a certain tech startup. Now after the investment, you can offer your sound advice or mentorship to this company. You would be participating in the growth of the company if you have a certain skill that’s valuable for the founder or other employees.

Read: How do angel investors get paid back?

Should You Invest In A Tech Startup?

The first thing on your mind was how can a normal person invest in tech startups, now that you have a fair idea, you would know whether it fits your budget or not.

If you have enough savings and you feel ready then now is the time to do something! If you are not sure what’s the right company for you then it’s best to seek professional advice.

It all depends on your personal preference. It’s highly risky especially if you have no knowledge of the industry, product, or service. Usually, it’s best to invest when you have enough information. You can do your research and decide if it’s for you!

You may like the following tech startup articles:

Wrapping It Up

Now that you know how a normal person can invest in tech startups, you would be ready to make the big move! In fact, if you have some savings or if you are earning extra it’s time to consider a tech startup. Understanding how a normal person invests in tech startups is the first thing.

If you are not clear, it’s best to discuss it with a financial consultant or an expert in the field. You can also ask a friend or relative who is doing such investments. It’s best to get yourself familiarize with the pros and cons so that you would know what to expect.