Investing in a Startup is difficult.
During our research on many successful investors of the silicon valley who placed early bet on the likes of Uber, Twitter, and many more unicorns, this angel investor could actually launch a VC fund themselves and raised huge amount of money from different investors for investing in startups.
Instead, many of the high profile investors preferred forming a syndicate and preferred one or the other platforms for investing in the startups.
Why they did so? Let’s find out:
The problem with most of the investors is that they are not full time investors. To many of them, investing in startups was more of a kind of hobby to be a part of something new and add value to the ecosystem. At seed level, the investment is low and it’s not a full time job of an investor.
The best deals come from the best network. The big advantage of being a part of the network is wide access.
Previously, an investor would try to cut a good deal by making it secretly so that any other competitors doesn’t find out about it.
Things aren’t that proprietary anymore in this modern information age. The benefit of being a part of the network is a way to get access to a lot of good deals that went unnoticed and were confined to a few earlier.
What are the options available for an investor today to invest in?
- Government bonds are a terrible asset class.
- Equities and market related instruments are uncertain with lots of insider trading happening in the markets.
- You could invest in art work like paintings but this are not something that will make you earn.
- Gold is of similar kind. It doesn’t create anything. No productivity there as well.
- Real Asset is performing bad. It doesn’t add any value as compared to the private investing.
Because of this, investors now days are going towards private investing. Private tech companies are creating wealth like never before.
One of the main aim of few of the active startup networks is to open this asset class to the world.
In 1990’s, silicon valley was said to produce 2-3 great companies every year.
In early 2000’s, it got increased to 5-7 companies/year.
Not we can say them producing more than 20 great companies every year. (Every 3rd deal in Silicon Valley is done through one or the other angel networks)