Invest in startups in 2022 – invest in new companies & companies

throttll
October 5, 2021
Investors today can invest in startups without any problems and no longer need to be wealthy millionaires.
invest-in-startups

Investors today can invest in startups without any problems and no longer need to be wealthy millionaires.

In fact, a dream come true for many traders if they could make a fortune by investing in a startup like Facebook in the early stages.

This article will determine growth curveexactly how you can invest in startups, which risks you must be aware of, and which providers are most suitable.

Table of Contents

What are startups?

Startups are nothing more than companies of any kind that were recently founded or are about to be founded.

The vast majority of startups can not stand financially on their own two feet and are therefore dependent on lenders or investors.

Often banks are not willing to lend money to these newly founded companies due to the high risk.

As a result, these companies either have to borrow loans from private lenders (usually at higher interest rates) or not to havefind suitable private investors for their company to not have to give up at the starting block.

Private investors generally have four different options to invest in companies :

  1. Startup stocks
  2. P2P loans, which can bring returns in the form of interest and repayments
  3. Crowdfunding
  4. Equity crowdfunding

In particular, shares and crowd investing are suitable for long-term financial participation in a startup and for receiving profit distributions, provided that dividends are already being distributed.

How can you invest in startups?

As mentioned earlier, there are four ways to invest in startups.

Startup stocks

Probably the simplest and possibly also the safest form of investing in a company or a startup is through shares.

However, the prerequisite for this is that the respective company has already completed its first foundation phases, and the shares can be traded on the stock exchange.

A well-known start-up stock at its time was, for example, the Uber stock. The company is still not writing any profits and lives from open financing and permanent growth.

Loans to invest indirectly in companies

You can use platforms designed for this purpose in order to lend loans to start-ups. We’re talking about P2P providers.

You don’t even have to choose the company yourself, and you just leave the investment to automated software.

Crowdfunding to invest in a startup’s products

With crowdfunding, you have the advantage that you can buy a small portion of the company – often in the form of products – without having to provide large sums of cash.

There are also special platforms for this, such as Kickstarter or Thundafund. Here, the investments of several private small investors are combined into one large capital investment.

However, one should be careful. So often, with crowdfunding, you only get products and no real shares in the start-up itself.

invest-in-startups

Equity crowdfunding to invest directly in start-up companies

Equity crowdfunding is a type of crowdfunding. The difference is that the profit-sharing in the success of the company takes place as a percentage.

If the company makes a profit, the crowd investor receives a fixed percentage. The same applies if the company makes losses.

Attention: in general, startups only achieve a few

Years

significant profits, which you can distribute to the investors.

Investing in startups via stocks in three steps

Stocks are arguably the easiest way to invest in companies. In the following, we present the system in three simple steps with the help of the broker Roinvesting.

ROinvesting

Step 1: Open an account with an online broker

In order to be able to use the services of a share custody account, we need an account. Accordingly, you open the Roinvesting start page and the registration form.

Various data are required, such as name, address, email address and other information. In addition, a few questions about your financial expertise are answered, and the verification of the data is completed.

Step 2: transfer money

The deposit can be made in a variety of ways. Here you can make use of one of the great advantages of Roinvesting and, for example, deposit via PayPal.

Payment optionpossible?
Investing in startups with a credit card✔️
Invest in startups with PayPal✔️
Invest in startups with Skrill✔️
Invest in startups with bank transfer✔️
Invest in startups with Neteller✔️
Invest in startups with UnionPay✔️

Step 3: the purchase

Now you can pounce on the company shares. As always, the requirement remains that the respective startup company is listed on the stock exchange. If this is the case, then the value will probably also be found in the Roinvesting portfolio.

Navigate to the relevant stock and use stock trading without trading fees.

Opportunities and risks when investing in startups

Let growth curves start with the odds. This is how startups can be extremely profitable. Many investors hope for a hit like the Facebook share or the Amazon share in the start-up phase.

But you don’t always have to hope for the biggest catch: Most startups that survive generate above-average returns for their investors compared to alternative forms of investment.

Crowd investors can then look forward to juicy profit sharing and relax and watch the growth curve of their company’s share.

Another advantage of crowdfunding are platforms such as Kickstarter or Thundafund, which in some cases thoroughly “examine” the startups and thus filter out possible rivets.

For example, the SouthAfrica crowdfunding platform Thundafund states that only

1 percent

of all startup applications that appear on your platform. A multi-stage filter system sorts out almost all companies in this way and only leaves the startups with the best prospects to investors.

Anyone who wants to invest in companies here can assume that they will receive valid startup offers. Nevertheless, it is worth doing your research.

  • Tremendous growth opportunities
  • Constant technological progress
  • Exciting platforms like Thundafund
  • Invest in new companies with stocks
  • High risk
  • Sometimes the capital is tied up for a long time

Investments in startups of all kinds are generally risky: Every investor must always bear in mind that

9 of 10

Startups will fail, and any money invested in such startups is money lost.

In crowdfunding, the concerns of crowdfunding investors are neglected in contrast to larger private investors who have invested independently of the “crowd”.

So you should only invest capital that you are ready to lose completely. Since the vast majority of startups only after a few

Years

Distributing profits, you should also be prepared for the fact that your money will be tied to the respective company for some time.

An alternative could be the aforementioned startup stocks, which allow you to invest in new companies.

In addition, startups are reluctant to reveal sensitive data about their strategy, their product or their business plan, so that you as a crowd investor do not have the same access to information as banks or large investors.

Loans also carry a high risk of default, which, however, can be reduced by permanent repayment.

Invest in companies with the best crowdfunding platforms

Thundafund

Thundafund is the most famous crowdfunding platform in SouthAfrica.

The company is based in Berlin and focuses on Southafrica as its investment focus. Investors can either invest in loans or shares in companies.

As already mentioned, only make it

1 percent

of all requests from companies actually on the platform. Here the investors can decide how they want to participate in the company’s success. The minimum investment capital is included

500 euro

.

A special feature: Thundafund takes care of the entire contract processing and offers opportunities for networking with other investors, as well as video conferences with the startup teams.

In addition, detailed analyzes of companies are provided. The platform is also the

only one

Crowdfunding platform listed here in SouthAfrica. If you want to invest in start-ups on Thundafund, you will be able to look forward to an increased security and service package, at least if you trust the information on the site.

SeedInvest

Another popular platform for investing in companies is called SeedInvest. SeedInvest was founded in 2012 and is an international crowdfunding platform that also uses other forms of financing, such as venture capital and angel investments.

However, these are rather uninteresting for ordinary private individuals, as they require more capital and more expertise.

When registering with your name and email address, you must also state whether you are an accredited person or not. The investment opportunities differ depending on what you answer to this question.

SeedInvest defines the wealthy as an accredited person, so most investors fall into the “ non-accredited ” category. (To be considered accredited, you must

millionaire

his or her annual income of over

200,000 euros

feature.)

The investor is then asked to disclose information about himself and his investment interests. Based on this information, investors then receive personalized investment offers.

You can then get in touch with interesting companies by contacting the company directly via SeedInvest.

For the investor, there is a fee of

2 percent

the investment made. Investors should also keep in mind that the minimum investment volume is

500 US dollars

lies.

Kickstarter

Kickstarter is a global crowdfunding platform from which a number of successful projects have already received start-up capital, such as the electric scooter “ scrooser ”, the smart headphones “ The Dash ”, but also projects such as the movie “ Stromberg ”.

Anyone who wants to invest in companies on Kickstarter will appreciate the usability of the platform. In this case, however, investment is usually not associated with company shares or returns.

If you want to invest in startups here, you have to register. Kickstarter also makes use of the startup’s profit: If a company is successful with its crowdfunding, leave

5 percent

of all revenue to Kickstarter.

There is also a processing fee of

3 – 5 percent

due. For investors, there are transaction costs of

3 percent plus 20 cents

per financial contribution, payment is made by credit card.

At Kickstarter, you can also invest via the Kickstarter app. What is interesting about Kickstarter is that you can not only invest in startups but also finance films.

In Stromberg’s case, donors were even rewarded with a supporting role in the film if they made a certain contribution.

Indiegogo

That finally brings us to the second largest crowdfunding platform, Indiegogo. Here, too, you get products or services for your support. There are no classic returns.

The way it works is therefore not significantly different from that of Kickstarter. However, one important difference is that Indiegogo focuses more on ideas and initiatives than on real start-ups.

Investors also have more flexible financing options. According to his statement, “

every little bit

“Money helps, which is why very low investments are possible.

Also, be at Indiegogo of all profits received, and for non-American investors, participation in crowdfunding can be very expensive :

Anyone who wants to invest in companies with a currency other than the US dollar pays transfer fees of There is also a transaction fee for all currencies. This is for the euro per financial contribution.

Another special feature of Indiegogo is the subsidiary platform “ GoFundMe ”, on which payments can be made free of charge. GoFundMe is more of a kind of donation platform for projects that collect money for a good cause.

invest-in-startups

Crowdfunding for Beginners?

Despite all security, crowdfunding is still a very risky investment. Anyone who wants to invest in companies must be familiar with the start-up’s topic and business model.

In order to increase his chances of success, all investors should deal with and understand the market analysis because startups often fail, not because their business idea was bad or the management was incompetent, but simply because the market situation was not taken into account.

Every investor should have enough capital to diversify properly. It should also be expendable money.

Real crowd investors should already have experience with other investments, such as stocks, ETFs or REITs. Crowdfunding is not suitable for beginners; shares in new companies are a much better alternative here.

If you want to start crowdfunding and invest in companies, you should first invest via trustworthy, secure and inexpensive platforms.

This is where the SouthAfrica crowdfunding platform Thundafund offers the best and safest way to get started with crowdfunding. Roinvesting stands ready as the test winner of the share portfolios for startup shares.

Which crowdfunding industries have the best chance of success?

The favourites in the following comparison are the health and fitness industries as well as the IT industry. It is in these areas that most of the new businesses emerge.

If you believe the experts, these sectors will continue to grow in the future, and their returns should increase significantly.

health and fitness

In SouthAfrica, there is one sector in particular that sets itself apart from the other sectors: the health and fitness sector. As a result, almost a third of all new startups were created in this area in 2019.

It has also had the highest returns for some time and is also a major focus for investors.

Sports products, pharmaceuticals and healthier foods are the main focuses of the industry. Due to the increased health awareness of the population and the falling birth rate, the topic of health has become much more important in the eyes of consumers.

This area should continue to grow in the coming years. Investors could benefit, for example, with the Peloton share.

Gambling

The second-place surprisingly goes to the gambling industry.

Although this area does not produce very many new startups, this sector is struggling in terms of returns. On the other hand, online gambling, in particular, is booming, even in times of pandemics.

The German state has regulated this area, but the full potential has still not been exhausted.

Many online gambling companies make large sales in other countries where the industry is not as strictly regulated as in SouthAfrica. That is why investments in gambling startups are very promising investments.

An interesting use case can be found in more and more Bitcoin casinos, such as Bitcasino.io.

IT and tech

A far more understandable winner in the IT industry: In this area, as in the health and sports industry, many new startups have been emerging for a long time.

Countless new apps and software concepts have literally flooded the market recently. Moreover, the rapidly advancing digitization of all areas of life will intensify this trend even further in the coming years.

Since it is also one of the most profitable industries, investments here have increased profit potential.

However, this trend does not apply to cryptocurrencies and related technologies, as this industry is at high risk. Otherwise, the IT industry is a (more or less) haven for investments.

At this point, we have a special tip for a startup investment: the Rocket Internet share. The German group is known for building a wide variety of business models.

Automotive industry

Although investors are investing more and more in these sectors, the automotive sector is still the most popular.

It is one of the most important industries in SouthAfrica. It is considered a safe investment, as the political leadership also has an interest in the strong auto industry and would support it with subsidies in an emergency.

Thanks to new drives, exciting investment opportunities such as the BYD share can be found, especially overseas.

Is it worth investing in startups?

In general, 9 out of 10 startups fail in the end. With that in mind, investing in new businesses seems far too risky.

What use is one

successful company in the portfolio if

others suffer a total failure? In the end, the result is a great loss.

Many crowdfunding platforms check the applications of the startups intensively in order to filter out bad candidates. So just land on Thundafund specifically

of all requests.

However, this number is misleading, because ultimately, it is not the structure of the company, the business plan or the team that is decisive, but the position on the market :

A well-organized company with a good product that operates intelligently cannot survive if the market for this product is not ripe, the competition is better, or other economic, political and social factors stand in the way of a startup’s success.

To invest successfully in companies that can break through, you need to understand the market and trends. Every investor should only invest money in a startup if he or she is at least reasonably familiar with the industry.

Only then can the residual risk be sufficiently minimized in order to achieve a bottom-line profit. So, without a doubt, the best way to invest in companies is in stocks.

Investing in startups – conclusion

Investments in startups can be made in different ways: through loans, crowdfunding, or crowd investing. Again, there are special platforms such as Thundafund on which this is possible.

However, this type of investment is very risky but also offers opportunities for high returns. As a general rule,

fail, often because the market situation has been underestimated.

Therefore, one of the best ways to invest in these companies is in stocks of the companies if they have already been issued.

Alternatively, you can also use ETFs and investment funds with a focus on young companies and start-ups. All these values ​​can be traded with a very good broker from Roinvesting.

4.9
4.9/5

Our recommendation: Trading at Investby

Our recommendation: Trading at Investby

  • The broker provides an Islamic Account
  • It provides a dedicated account manager
  • Receive customised investment news
  • Trade with a variety of assets
  • There’s no deposit limit
ABinvesting Review
4.5
4.5/5

Our recommendation: Trading at ABInvesting

  • Acknowledge the financial markets through education material 
  • Free VPS is available 
  • Get a swap discount of 50 per cent 
  • Islamic Account is available to traders 
  • Select account types of your interest
4.9
4.9/5

Our recommendation: Trading at PrimeFin

  • Fifth decimal available 
  • Spreads begin from 0.03 pips
  • Commission is zero  
  • Full 10-hour support  
  • News alerts and VPS for traders

FAQs

Crowdinvesting is a form of crowdfunding. This means that many people participate with smaller amounts of money in projects, in this case, startups. These amounts of money eventually grow into a larger sum due to the number of investors.

This is easily possible through shares. You can invest in companies and startups, provided that the companies have them listed.

Access to investing in stocks from new and young companies is extremely straightforward, thanks to online brokers such as Roinvesting. However, not all companies have already gone public.

There is always a risk of investing in a company. If you look at all startups, 9 out of 10 fails. However, you can reduce the risks through market analysis and the use of reputable brokers.

Get a Callback

A trusted broker will contact you today.

Name(Required)