If you must
If, despite the risks, you still want to try out your luck, it’s best to be thorough in startup selection. You must be ready to do a lot of research–studying the business model, the possibility of success, the demand for the service being offered, gauging the quality of the management and the founders, among other things. Given the required effort, experts doubt that ordinary investors are up to it. “Startups are diverse, it is very difficult for one person to understand so many businesses at one time. An average retail investor does not understand mutual funds, how will he understand startups?“ asks Sadagopan.
Startup investing platforms such GREX, however, offer an alternative. GREX is a marketplace-of-sorts where investors and startups meet. People interested in investing in startups can get themselves registered on the platform for an annual fee of `6,000. Startups, after being vetted by a panel of GREX experts–to ascertain their prospects–are then registered for an annual fee of `10,000 on the platform. GREXregistered investors can choose to invest in a company of their choice, based on the updates they get from the registered companies. An investor may choose to exit by posting the price at which he bought the shares and the price at which he is willing to sell. Those registered on GREX can then take up the offer. “I believe GREX is solving the problems of individuals who can take the risk of investing in startups but weren’t able to find an opportunity to do so,“ says Delhi-based IT professional Vikas Kumar who invested around `15 lakh via GREX.Kumar has limited his startup exposure to less that 10% of his total investment portfolio.
Despite platforms such as GREX facilitating angel investors find quality startups, the investment risks are still quite high.And for those enthused by the idea of making a quick buck, the words of Nikesh Arora, President of Japanese telecom and Internet giant Softbank and a prominent startup investor, should serve as a warning: “There is a start-up party on but most investors will wake up with a hangover.“