The startup revolution is on the rise in India. Undoubtedly, everyone might have come across different successful startups and thought about investing in them in the early stages.

Well obviously one needs a ton of capital to become an angel investor but as times are changing, you may not need a crazy amount of money. So, how does it work? What are the pros and cons? Should you invest? You will get the answers to all these questions below.

First, let’s evaluate the pros and cons to figure it out.

Undoubtedly, there is a high risk involved. Since these companies are unlisted, we need to understand that in case something goes wrong, SEBI may not be able to help you. The regulator has limited jurisdiction as well.

What to check before investing?

Once you have decided that you want to venture into the road less travelled by retail investors, it is also important to see what exactly you should look for in a startup.

Analyse the Industry

While some industries may be doing that well, some might not. For example, since 2021, fintech seemed to be taking over the country but nowadays AI and Deeptech are on the rise. So, it is important to understand the growth potential of a startup and its sector.

Evaluate the Business Model

A lot of startup biz models have buzzwords like “revolutionary”, “game-changing” and whatnot. However, they are not very clear on their monetisation strategy. Therefore, make sure you understand very well how this business is going to make money before even thinking of investing.

Figure out the USP

This means the USP of the startup. The odds of you bagging the next Ola, Zomato and Netflix are fairly limited though not impossible. Therefore, it is important to find the key differentiating factor.

The Founders of the Startup

Research well about the founders through LinkedIn and conduct thorough due diligence on their previous experiences. Have they worked earlier in a startup? Is it their first time? Do they have amazing connections? Figure out the answers to such questions.

Also Read: What is FIRE – Financial Independence Retiring Early?

How to invest in startups in India?

There are a lot of platforms out there, such as Tyke, Letsventure, Gripinvest etc. Here’s how you can invest in startups through them:

• Go to the home page
• Filter based on the sectors
• Pick a startup which seems interesting to you
• Go through its details and conduct your research separately before investing.

While you are all set to invest in startups, remember that you need to be extremely careful. You should only invest the money that you’re okay losing because it is an extremely risky option.

Disclaimer: The above content is for informational purposes only. The 1% News recommends consulting a SEBI-registered financial advisor before investing in any startups.