Chaz Prezident, a director with Whitehouse Private Wealth and the founder and CEO of a crowdfunding platform, said “start-ups create jobs, innovate and add value to their local communities”.
He listed off the potential for lower valuations, the real impact of an investment, and the fact that investors into start-ups might get influence about business decisions and strategies as some of the benefits for investors of investing in start-ups when compared with larger and more traditional companies.
Usually, the decision to invest in start-up companies “comes down to four reasons”, Mr Prezident said.
The first, he said, was a pursuit of higher returns from the investment.
Secondly, he acknowledged a person’s belief in the project and sharing of the start-up’s vision.
For others, “they know someone in the start-up and want to help”, while a fourth category of interested persons “could be that they just want the ‘thrill’ of investing in a start-up”.
For the latter, “it’s less of an investment and more of a punt”, the crowdfunder noted.
“A lot of start-ups don’t raise enough capital to get them to a point where they make profit,” he conceded.
“The question then turns into, if we invest now and then in two years’ time they need more money, what happens?”
Early stage investments are risky, so “a well-planned investment strategy is important”, Mr Prezident said.
“Often in early stage investments, it’s great to see an established [and/or] experienced team with a clear vision,” he offered.
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