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Startup World

 
Started by : Sudeep Tarafdar, Senior Consultant, IBM   07 24 2010 06:28:16 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : Getting Started(Entrepreneurship)
Activity:  36 views;  last activity : 01 11 2011 21:07:09 +0000

There is a world of difference between investing in startup companies and investing in the stock market, and the main difference lies in where your money goes. When you buy a stock in the stock market, your money usually goes to another individual: the person who owned the stock before you.

http://www.stoc-ny.com/library/news-thumbs/j0433139.jpg

But when you invest in a startup, you're investing directly into the company, buying newly issued stock that no one has owned before. So to invest in startups, you've got to find companies that are issuing stock directly into the market to raise money. Startup companies are usually small companies and usually new companies. They are unproven, frequently having little money and less market share. Often they are started on a shoestring and a dream, a song and a prayer--but you want to find them before they become a household name.

So users, what are the top 10 things an investor looks into before investing in a startup?

 
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1 2 3 4
1 Compelling product/service differentiation
2 SAFETY FOR HIS MONEY
3 opportunity
4 What is the specific purpose of raising funds

Compelling product/service differentiation

idea posted by Sudeep Tarafdar Senior Consultant, IBM

The knowledge of business idea is very important part before investing in a startup. By the knowledge of the business idea, the investor can make an estimation how much profitable his investment in the business would be thus his taking risk will be fruitful. Also, before before investment, any investor would see whether the business idea have a compelling product/service differentiation over other startups or not.

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There are many things that an investor looks into before joining a startup. I also agree with Sudeep. They look into the type of product and/ or service, is this a viable idea, product and service difference, possible future business outlook, who are your other investors, who’s all involved in the business, business plans, strategic plans, your competition, board of directors, financial outlook etc, etc…

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SAFETY FOR HIS MONEY

idea posted by s.baalu Consultant, XYZ LTD

AN INVESTOR GETS PROFITS IF THE PROJECT SUCCEEDS. IF IT FAILS HE LOSES  NOT ONLY HIS PROFITS BUT HIS CAPITAL ALSO.SO FOREMOST IN HIS MIND WILL BE HOW SECURE WILL BE HIS CAPITAL.

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opportunity

idea posted by Suryanarayan Murthy Asst Vice President (Corporate Finance), A Hydro Power Project
(1) An opportunity to increase his earnings (2) an opportunity to become a part of a successful venture (3) an opportunity to invest further
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What is the specific purpose of raising funds

idea posted by Veena Gupta Analyst, Blackstone Group

The investor should very well know what is the specific purpose of raising funds. Whether it is for Marketing, for research, for manufacturing or for distribution.

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