Last week I was presented an opportunity to invest in a privately owned start up company exchanging capital for a stake in ownership of the company.
When I was first informed of this potential opportunity, I became very excited. This was the first time I had the chance to invest in a privately owned company. Up until this point my investment portfolio has included depreciating assets when I was younger. Then higher priced management expense ratio mutual funds, and finally becoming a DIY index fund investor for the past couple years.
Having the chance to possibly diversify my passive income streams while working towards and eventually achieving financial independence, has made me seriously consider this opportunity.
I realize start up companies have a very high failure rate and with that the risk versus reward is very high. I have been completing research about the management team, the company, their competition, and what to look for before investing in a company.
The knowledge gained has helped but I have always believed that hands on experience trumps book smarts obtained from just reading about it.
With that being said any possible advice you guys can share from your experiences of investing in a start up company with me by sending me a private message or dropping some knowledge in the comment section. Would be greatly appreciated.