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things investors should look for in a startup

6 Things to Look For When Investing in Startups

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Financial Performance

Is the startup company financially stable? Generating any revenue? Showing signs of growth? When investing in startup companies,  their current financial performance and future financial plans are vital to evaluating its potential.

Background & Experience

Is the management team experienced in the industry they are operating in? Have they had success with prior ventures? Research the company’s management team, look at their past business experience and make sure they are committed entrepreneurs.

Company Uniqueness

Is the company’s product or service unique and doing something new or different? A unique product or service sets the company apart from the competition and has a higher chance of success.

Business Model

Take a close look at their business model to see when they are planning on generating profits and how. The company has a higher chance to generate profits if the business model is clear, strategic and well thought out.

Market Size

It’s important that the company is solving a problem in a large or growing market. This allows the company to grow and scale, and tap into multiple revenue sources. Look at the competition operating within the market, a large growing market with low competition is a recipe for success.

Traction

How large and stable is their customer base? The amount of traction the company has achieved shows the impact they are having in their industry and helps indicate future performance.

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