Do you want to invest part of your capital in a start-up? Before you get started, it makes sense to ask yourself what will allow you to confirm or deny your desire to invest in a start-up. We invite you to discover the six questions to ask yourself.
1. What is the start-up’s project?
Any investor must question the nature of the project carried by the start-up. In other words: “What does she do for her clients? “. It is essential to obtain precise answers from the founder of the start-up in which you wish to invest.
They must explain to you, in a concise and documented manner, the impact generated by their products or services on their target customers. To be able to assess the quality of the project, it is preferable to orient yourself towards sectors of activity in which your skills are proven.
2. How is the start-up’s added value created and for which target?
Knowing the start-up’s value proposition is a real prerequisite. This is presented to you as a perfectly targeted mechanism. This therefore means that the personas are identified, along with their needs and expectations.
Does the start-up’s project you are thinking of aim to respond to a problem that its customers are facing or is it an opportunity to provide them with a valuable product / service? ? How is the start-up’s offer unique? What guarantees are there that customers will come back?
As long as the added value of the start-up is not demonstrated, it risks quickly going bankrupt.
3. How does the start-up stand against the competition and how does it stand out?
Whatever the innovative side of the project, it may well be a hitherto non-existent offer, it is good to study direct and indirect competition. The start-up must be able to explain to you the alternative means it has put in place to offer its customers results identical to those offered by the competition.
Also ask yourself about the technologies or companies likely to quickly wipe out demand for the products distributed by the start-up, in the short, medium and long terms. Are there any factors (technological, legislative, economic, environmental or linked to market developments) that could slow down the development of the start-up?
The more aware you are of the difficulties that the company may face, the more you are able to make a reasoned decision.
4. What is the business model of the start-up?
How does this young company, which interests you, generate income? At what level of the production chain are income and profits created? Under no circumstances can an investor make funds available to a start-up without knowing his business model.
Do not hesitate to ask questions about the impact that the evolution of the market may have on the business model adopted by the start-up. The answers provided will allow you to understand how the start-up sees itself in the future. Did she anticipate all cases or just one?
5. Which teams are involved to get results?
What is the key to a successful start-up? The establishment of a partnership strategy. In fact, only its partners (colleagues, employees, teammates, etc.) are able to create the leverage that the start-up needs to quickly obtain positive results.
Human resources cannot be ignored. Do you know the proportion of tasks that are done within the team and those that are outsourced? How is the work organized and coordinated?
Make sure the teams involved see themselves as a community of interest united around the development of the business. This spirit should be seen as a source of support.
6. What is your motivation?
Your willingness to invest in a start-up must be justified. What is your motivation for embarking on this adventure? Apart from the financial aspect, does this project come close to your skills?
In the event of difficulties, are you ready to maintain your investment in the start-up or would you be tempted by a capital outflow?
It is only after you have studied all of these points that you will be able to determine the merits of investing in a start-up.