Why is it so interesting to invest in startups?

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WHY IS IT SO INTERESTING TO INVEST IN STARTUPS?

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It is an alternative investment that serves to diversify your portfolio (+). It is the most profitable alternative in the last 10 years. In addition to financial profitability, it provides other benefits, which you will discover as you go along, such as business angel (+). In a situation like the current one where the more traditional investment products are giving very low, if not negative, returns, it is important to look further afield and seek other asset classes in which to invest with good return potentials (bearing in mind that normally, the higher the potential return, the higher the investment risk).

Today more than ever, there are many cases of innovative companies with high potential that in a short time have managed to increase their valuation exponentially, offering returns of more than 10x (10 times their initial investment) for investors who placed their trust in the early stages. This exponential growth usually goes hand in hand with high risk, which we must manage as investors by building a sensible, diversified and balanced portfolio. Certainly one of the key motivations for investing in high-growth companies is the potential for profitability, but there are additional benefits.

ADDITIONAL BENEFITS

  • Potential for rapid growth: the startups (+) have the potential to grow rapidly, which means that they can generate a significant return on investment in a short period of time.
  • Portfolio diversification: Investing in startups can help diversify your portfolio and reduce risk compared to traditional investments.
  • Participation in success: by investing in a startup, you can be part of its success and have a direct impact on its growth and development.
  • Access to exclusive opportunities: startups often have unique opportunities that are not available in other investments.
  • Residual income potential: Some startups can offer long-term residual income as they continue to grow and generate profits.
  • To learn about new innovative methods of business creation and scaling up.
  • To have access to the most innovative projects in an exciting sector, and to experience it from the inside.
  • Generate real and positive impact through investment: change things.
  • Get involved in early stage companies and contribute ideas, experience and value.
  • Invest today in companies that could be multinationals tomorrow.

Moreover, from a financial point of view, investment in high-potential innovative companies typically has a negative correlation (complementary cycle) with respect to the financial markets we are familiar with (equities in listed companies, real estate market assets, government bonds, etc.). That is to say, the fact that the share price of a benchmark bank plunges (for example), should not affect the evolution of the company's value, they are assets totally independent of each other. This implies that incorporating such alternative assets could increase the expected risk-adjusted return of a portfolio.

QUIZ

  • ARE YOU INTERESTED IN INVESTING AS A BUSINESS ANGEL? (see EBOOK)

Register for the Business Angels School mentorDay, where you will practice with all the tools and concepts to make money investing in startups.

Sign up for the Acceleration Programme (+) mentorDay in order to gain access to a Business Angel by participating in the CoInvest.

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Picture of Jaime Cavero

Jaime Cavero

Presidente de la Aceleradora mentorDay. Inversor en startups e impulsor de nuevas empresas a través de Dyrecto, DreaperB1 y mentorDay.
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  1. Elvis Salavarria

    Las Startups nos dan la oportunidad de conseguir financiamiento y muchas otras oportunidades decrecimiento como emprendedores. De manera que se convierte en una excelente oportunidad tanto para el emprendedor como para en Financista o Business Ángel.

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