The startup ecosystem is alive and kicking. As brilliant ideas and promising new solutions rise, angel investment opportunities also abound.

Investing is full of risks and others see it as a gamble, but it can bring you amazing benefits. Aside from the fact that it diversifies your portfolio, it allows you to support the ideas you believe in. It gives you the chance to change the world for the better, which, according to many investors, is the most rewarding part.

But looking for a great startup that is worth your time and money can be tricky. What makes a good startup, anyway? How can you make sure that the project is worth it?

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To help you decide, we list down the signs and important points you must consider before taking the leap.

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10 Signs you should invest in a company

1. Awesome Product

A company’s product or service will be the root of success or failure. If it strikes a nerve, it’ll have an opportunity to survive the competitive market. The best way to know if the product is great is to get actual users on it. How do the consumers respond to the product? Is it getting positive feedback? Will they still buy the product two to five years from now?

2. Research and Development (R&D)

Companies should invest in R&D because this assures the cycle of innovation and future market variations. A well-budgeted R&D ensures you that the startup can follow or stay ahead of market trends.

3. Market Opportunities

The larger the market, the higher the chance for the company to grow fast. If the market is only emerging, focus on how big the market is expected to get. If there are existing solutions in the market, assess how the company’s solution is different from the rest.

4. All-star Team

As an investor, you don’t just invest in ideas. You invest in people as well. A company’s team should have complementary skills in sales and marketing. There should be a smooth relationship among them. Remember, if the team crumbles, the whole company can suffer. And don’t forget to observe the founders. They should be passionate, optimistic yet realistic, and have an eye for quality.

5. Concrete Business plan

Half-baked ideas are only loose talk without a solid business model. A good business plan will be the company’s foundation because it will keep the company relevant. Without it, even the fanciest idea is useless. This also concerns their market strategy. The company should be ready to renovate its strategy to survive tough competitions.

6. Industry Knowledge

Founders should know their products inside and out. Strong product knowledge is important in instilling trust within the customer. If the people behind the company know their products by heart, it’ll be easy for them to step up their strategies and improve the quality when needed.

7. Solid Return

Aside from gaining profit, you’re also expected to receive a sense of ownership. As an investor, you are worth more than just your money, you also add value to the business. The company especially its founders must be open to your insights and advice.

8. Credibility

The company and its people should have good reputation and values. Remember that you will work with them for a long time, so their honesty and professionalism is important. Your vision must be at least compatible with them.

9. Investor Fit

Never underestimate the power of investor fit. It’s easier to invest in a company that belongs to the industry you’re interested in. It’s better if you seek for projects that are related to your field. For example, if you own a restaurant and you’re passionate about it, you’ll feel more connection to startups that concern food. Since you can relate, you can be an active part of the company and give the team some guidance when they need it.

10. The X-factor

Chemistry is vital. There should be mutual likeability between you and the team. Ask yourself these questions; if these people call you at two in the morning asking for your help, will you gladly take their call or not? Or can you see yourself having lunch with them for the next five years?
In a nutshell, there are three things you need to do before funding a company.

  • Analyze and audit the company you are targeting to fund.
  • Meet the people behind the company.
  • Study the market and the competition.

It is significant to think thoroughly about the investment’s potential. Yes, there are many angel investment opportunities around, but not all can bring you gold. So, don’t rush and take your time before making the million-dollar decision.

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Rose Tornandeso is a freelance writer from the Philippines. Aside from writing for NextStep, she also enjoys writing fictions. When she’s not chasing deadlines, she plays legos with her son and visits art galleries.