There’s never been a better time to invest in startups than now
If you had to tell traditional investors that investing in a start-up is a good idea, most would recoil in horror and regale you with anecdotes about the 2001 dot-com bubble. Who can forget Yahoo!’s spectacular misjudgement in shelling out $5.9 billion for Broadcast.com, only to close it down a few years later.
But we forget about the digital platforms that made it through the crash and are now some of the biggest companies in the world. Today eBay and Amazon are household names with billions in annual revenue. Amazon’s shares — currently trading at $830 — fell as low as $7 per share during the crash.
It’s received wisdom that nine out of 10 startups fail, but of those who do succeed, some have managed very handsome returns for their investors. Calculations by SeedInvest Automated Investing has shown that over the last 30 years, early stage venture capital returned 22.65% compared to 9.93% for the S&P 500 index and 6.57% for the Barclays Credit Bond index.
A more mature understanding of the startup market and new risk- minimising investment products have made such investments an attractive option for normal investors.
The ability to spread your investment over a range of startups has meant that this particular high yield investment is no longer only reserved for big-time venture capitalists and angel investors. Everyone with some spare cash can now support the digital platform revolution that is changing the way we do business with each other.
Originally published at www.eventerprise.com on October 10, 2016.