Investing Rules

nice information

Good information here.

May I add something similar,

“One common adage…that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.”
William Eckhardt

These are some rules for investing in start-ups:

Know your industry: The most important rule of successful startup investors: Focus on industries you know well. Otherwise you’re much more likely to fall victim to hype or overlook poor fundamentals. Without deep knowledge of the specific market in question, a startup’s pitch will be more difficult to evaluate. In these situations, your decision can be swayed by a sales pitch rather than informed by objective, real-world metrics. Before investing, thoroughly research the startup’s industry. Better yet, partner with people or institutions that have extensive operating or investing experience in that field.



Know the concept: Of course, you also need to consider carefully what the company is trying to do. The first question an investor should ask is, “What makes this idea unique?” You need to figure out what separates this company’s idea from its competitors. Investors should also understand whether the startup’s idea is even feasible. If so, how easily could competitors replicate the business? It’s critical to uncover intricacies in a startup’s strategy or product that will allow it to gain market share and fend off competitors. Also, look for companies with products or services that will save people time and money, and which users can easily adopt.



Know the management: When you invest in a startup, you’re really investing in people. Even the best ideas don’t mean much without people who can implement them. Beyond that, if the initial idea doesn't work and a startup needs to pivot, a great team can make all the difference between success and failure. If you’re not in the position to meet with the founders of a company, then partner with a group or funding platform to do that for you. If you fund a company without consulting someone with direct knowledge of the team’s dynamics, you’re taking a risk that could be avoided.