In our previous post, we discussed the strategies you can employ to increase your chances of being successful at investing in startup businesses by mitigating small business risk. In this post, we will address the other major risk inherent in Angel investing – liquidity risk – and ways you can mitigate liquidity risk, as well.
In our last post, we discussed the details of the two main risks that Angel investors will face when investing in startups - small businesses risk and liquidity risk. This post presents a few strategies that will help investors mitigate these risks and increase your chances of making successful Angel investments.
As we noted in earlier posts, the risk profile of investing in startup companies has shifted, making startup investing a more attractive alternative investment than it might have been in years past. In saying that, investing in startup companies is still very risky. In this post, we will discuss a few of these risks, and in subsequent posts, we will present several strategies that will help mitigate these risks and increase your chances of being successful.
One of your first questions about angel investing may be, “If this angel investing thing is so great, why is it only now becoming so popular?” Well, investing in small startup and growth businesses is not new – in fact, angel investors have been around for decades - but over the past five to ten years, angel investing has become a more popular way to diversify outside of typical investment vehicles. Where is this popularity coming from?