Finance Monthly - November 2022

for some percentage of future profits. You need to decide whether you will go with debt or equity investment. Debt investment doesn’t make you a partial owner of the growing company you’ve decided to fund. Whether or not the start-up succeeds and starts making money or fails and bankrupts, a debt investor gets paid back an agreed-upon sum, traditionally the initial principal balance plus interest. If you decide that equity investment is a better option for you, funding a business will make you a key stakeholder. Depending on what you and the start-up have agreed upon, you will either get a portion of its profits or a return on capital while also getting a say in how the business is run. The Small Business Investor’s Checklist If this is your first time funding a small business as a private investor or if you’re considering starting your venture capital firm, the following checklist will help you grasp the investment basics. Note that investment decisions require knowledge, experience, and instinct, so take your time to learn. Discover New Investment Opportunities First things first – how do you keep track of new investment opportunities? We have two words for you – business insight. While business insight means different things to different types of investors, it ultimately encapsulates the entire well of knowledge you must possess before you can start making smart investments. That includes your understanding of entrepreneurship in general, relevant markets, and investment signals. Successful venture capitalists get business insights and actionable data from multiple sources. Constant involvement keeps them in the loop with emerging companies and market trends and helps them track their progress. It takes a Finance Monthly. Inve s tmen t 51

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