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Taking The Risk Out Of Those Risky Funding Ventures

There are two kinds of investors. There are those who read the market and react to data that shows them the right way to make safe bets. Then there are those who supports ideas and people, who grow the economy and see potential. The latter of those can make serious money from investing in businesses. But there are ways you can do that while making sure you’re safer in earning a buck.

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Offer more than money

If you’re an experienced businessperson, then perhaps money isn’t the only thing you can offer. If you see an idea that has serious potential but is being driven the wrong way, then offer yourself. Become a mentor to those you fund. Help them spot the biggest risks to their business and how to fix them. Entrepreneurs need mentors. Going from business to business with precision fixes is how great people like Warren Buffet made their fortunes, after all.

Be the first in line

There’s a big risk to be taken when you invest in a business. There’s no way to guarantee you get your investment back. There is, however, a way to increase the chances even in the worst-case scenarios. If you take a share in equity, you are owed nothing but a share of the business. If you go for debt funding instead, you are owed what you lent plus the interest. That way, if a business goes under, you’re amongst those getting paid first from the money obtained through bankruptcy. Of course, you want the businesses you fund to succeed, but it’s important to prepare for the fact that doesn’t always happen.

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Invest in what you know

When you start angel investing, there are going to be a lot of people coming towards you. With that many options, it can be easy to feel tempted to some of the most exciting. However, you need to avoid investing in those that sound foreign to you. They might be exciting to you, but someone who knows the industry could very well see that it provides nothing new. Whether you’ve worked in the industry or are just a fan of it, make sure you only invest where you have some level of knowledge.

Sell your method

It’s not entirely related to investing in businesses, but there is a way you can make an extra revenue stream. Once you’ve nailed down your method of investing, offer to teach that, too. Start a blog, offer webinars and consider even writing a book. There are a lot of people who are looking to build their wealth. If you prove successful, then why don’t you provide the knowledge you need? At the same time, you’re making more money and building a powerful personal brand.

Funding an idea is a great thing to do. But you don’t have to do it in a way that puts you at significant risk. Make sure you’re helping those you fund and that you’re going to get your money back with the tips above.

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