How To Invest In Startups - Financially & Emotionally
You don’t have to be an everyday investor or work for a financial institution to invest in startups. With the emergence of crowdfunding sites like Kickstarter and Patreon, the general population now has a lot more access and opportunity to start investing in startups themselves.
But the average person seems to take a more personal approach to investing. Most often, they might invest in a startup run by a friend, colleague or family member. Additionally, social media has allowed small brands to build awareness and an aspiring investor might contribute in order to support a favorite small business. Either way, it can be argued that the unfamiliar investor likely cares more about making an impact than turning a profit.
That being said, it’s important to remember that all investment comes with risk. It’s said that approximately 90% of startups fail and the reasons for failure range from a lack of funding to poor market research to ineffective marketing and everything in between. At the end of the day, consider investing in a startup you know well and are passionate about.
The emotional ride for startup investors can be as bumpy as it is for the entrepreneurs who are building these businesses. And as an investor, you may find that the founders you’re supporting need more than tactical business advice. Many first time founders find the stress and intensity overwhelming. Enough to quickly turn a brilliant person into someone who isn’t able to move their business forward any further.
If you are an investor who has a close relationship with the founder of the startup you’re backing, you may be in a position to offer more than just business advice. In order to survive that overwhelming stress and intensity that comes with being an entrepreneur, it helps to have someone that knows the situation well enough to offer emotional support as well.
At Founders First, we understand that the investor and the entrepreneur both need tools to overcome these times of high stress, and we’re working to build a common language within the industry to make it easier for founders and investors to help each other. We’ve created a mental health and performance tracking app that brings awareness to your current mindstate in order to identify the areas in which you’re struggling and the app then offers mindfulness tools to help you improve those areas.
For example, let’s say you invested in a friend’s company and they’ve come to you with last quarter’s sales metrics. Unfortunately, they were way off the projected numbers and your friend is visibly shaken as he breaks this news to you. Because you’ve both been regularly utilizing the mental health and performance grader, you recognize that the best way to help your friend through this trial is by encouraging him to find calm using one of your favorite breathing tools in the app: Ten Clearing Breaths. This exercise will give your founder friend a quick reset and remove tension from the body to allow him to approach the situation with a clear head.
This is how the Founders First app is building a common language among investors and entrepreneurs alike. By sharing the journey and being transparent with each other about your current mindstate, you’ll be able to help one another reach a level of performance that will also keep the business afloat. Because if the founder is too stressed or anxious to make the right business decisions, then there’s a high risk that one of those decisions will have a detrimental effect on the business.
If you’re thinking about investing in a business that you’re passionate about and you know the founder well, consider offering more than just financial support. Your investment may help the business in a technical sense, but by offering emotional support to the entrepreneur, you could potentially be making a bigger impact than merely signing a check.
Consider joining over 3,000 entrepreneurs and investors who are working to help us build that common language in the industry. Try the app free for seven days.
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Founders First is a set of evaluation tools that will improve your business by strengthening its most critical asset: You.
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Founders First is a set of evaluation tools that will improve your business by strengthening its most critical asset: You.
Founders Forum is a live show where we talk about mental health in entrepreneurship and how to build resilience to stay stronger, happier, and be more successful.
