Investing in Startups is Tricky…

Valuing a startup is both art and science.

The science is the easy part…

Lili Balfour of Atelier Advisors

I started investing in startups in 2020 when the Covid-19 pandemic hit, and like many others, I suddenly had a little bit more time in my hands. I was fortunate to still have a job while many, especially the ones in the travel, retail and F&B industry got hit hard. I managed to save up a little more than I normally do, and I started thinking what I should do to make these extra savings work for me. I have always been interested in solving problems better through innovation and technology, and one day, I saw an ad on Facebook asking retail investors for money through crowdfunding. Wait. What?! I can invest in startups now?

Photo by Austin Distel on Unsplash

I started looking through the list of companies that were launching their equity crowdfunding campaign and got so excited. I started with Birchal as I find the platform more legit than the others I found. I set aside a small amount of money that I can afford to lose and started searching for the startups that work on problems I am passionate about, the ones that I think can be successful. I was relatively casual with my approach, almost like I am shopping for a bag. The crowdfunding platforms were quite good at architecting the crowdfunding campaigns to look like a massive year end sales. There will be press releases from the startups featuring some of the big names in the industry endorsing their products. There will be discounts and goodies if you invest a certain amount or invest by a certain date. There will be emails highlighting the progress of the raise and there were a sense of FOMO among the crowd. The records of the fastest, biggest crowdfunding raise were broken again and again in a matter of weeks. There were simply too many “distractions” and I have to admit that a couple of the early investments I made were affected by these distractions.

Photo by Chase Clark on Unsplash

After a few “poor” investments, I started studying how the pro actually vet these startups and make investment decisions. I studied how the angels and VCs assess and value startups and came up with a valuation framework for new startups. With that, I have decided to document my findings through this blog. Some call this a deal memo, some call this a due diligence paper, whatever it is, I hope that the investigation will help inform you a little better if you are also looking at investing in the startups I am covering.

Crowdfunding Platform Coverage

  1. Birchal
  2. Equitise
  3. On-Market
  4. StartEngine
  5. SeedInvest

Discipline. Discipline. Discipline.

Happy hunting!

The Startup Investigator