Investing in a Startup Isn’t as Dumb an Idea as People Say It Is.

Are you thinking about investing in startups, but are hesitant because of all the fear mongering around startup investing out there? I’m sure you know what I am talking about. There are plenty of people out there who will tell you things like:

“When you invest in startups, expect to lose all your money.”

“Your returns as an angel investor are typically negative, so don’t bother.”

“Angel investing is stupid… don’t do it (even though I made 5X returns angel investing).” And I quote this from an actual conversation.

If startup investing is so risky and so dangerous, why do you hear about so many Silicon Valley millionaire and billionaires getting rich doing it? And why are these typically the same people telling you not to bother getting involved?

The answer is simple: they have learned to do it the right way, and they don’t really want anyone else infringing on their turf. Why is that? Well, it’s because they want to keep the secret intact. The secret to investing in startups the smart way.

If you want to get involved in startup investing and actually generate out sized returns, you need to work at it. That means taking the time to educate yourself completely about this highly complex and variable asset class. You need to get up to speed on how to perform due diligence, how to evaluate a term sheet, how to understand different deal structures, and just to have an overall awareness of current trends and developments in the startup market. It can really be a full time job. This is why venture capitalists exist and are often handsomely paid.

You need to develop relationships, help people who can do nothing for you, offer tons of free advice, make introductions, accept coffee meetings, read everything, and most importantly, get to know A LOT of people. During that time you will probably meet a few who are special. It’s almost like they vibrate at a higher frequency. Once you get used to knowing what to look for, you’ll get pretty good at spotting them right away. These are the folks you want to invest in.

So what things do we look for when selecting companies for investment on 1000 Angels, the company I co founded? Here’s a short overview:

— Stellar founder. If you don’t feel something that excites you when you get to know the founders, they are probably not the right person to invest in. The reason you have that special feeling is because this person has some really unique skill, vision, or vibe that is seriously impressive, and you are subconsciously aware of it. Listen to your heart.

— Attractive market. A market that has relatively few competitors, and in which the founder can establish some sort of competitive insulation or advantage is key. I shudder inside when I hear someone has invested in the 20th “me-too” company in a particular space. Recipe for disaster.

— Traction. What has the team actually accomplished? If they are just coming to you with an idea on paper or a binder-thick business plan, run for the hills. Invest-able companies are those who have proven they can acquire customers, provide value, and maybe even generate revenue. Your investment dollars are hopefully being used to fuel growth of a tested business model, not to make costly mistakes.

— Deal structure. Uncapped convertible note? Forget it. $15 million pre-money for a company that has no traction? Run the other way. There are a million reasons deal structure can torpedo a deal, and learning about all of them usually involves experience, and doing your homework. There have been plenty of cases where investors have bet on companies that resulted in multi-million dollar exits, but no return for early investors who took a ton of risk. You could write a whole book about these cases. Maybe I will…

These are just a few important tips on how to make smart startup investments that can be a great addition to your portfolio. And while I won’t tell you should should invest your child’s college funds in a startup portfolio — and you should realize you could lose all of your invested capital — if you are careful, diligent, and leverage the resources available it’s not outrageous to expect a decent return on your investment. The goal of startup investing is to build a portfolio and develop wealth over time through smart investing in people that you trust and believe in.

There are a lot of resources out there that can help you get started. Startup investment groups and platforms, blogs, webinars, and masterclasses can point you in the right direction. And don’t forget, diversification is key to this strategy. You can’t just invest in one or two companies and hope they work out. It’s really hard to pick the winners, but with some careful attention, you can try to avoid the losers. And avoiding the losers is a key part of making sure that your diversified portfolio performs well.

Disclaimer: - Following article come from FORTUNE

Indian startups lack the scale and depth to make another Silicon Valley

As I write this article, I had a chance to meet with and learn about some of the entrepreneurs shaping India’s startup ecosystem.

As I compare our entrepreneurial ecosystem with others, I am reminded of the three pillars that characterize thriving startup ecosystems: breadth, scale, and depth. By breadth, I mean how many sectors of the economy does the ecosystem span. By depth, I mean how many players in each sector. And by scale, I mean how large are the companies in each sub-sector. Thriving startup ecosystems like Silicon Valley are characterized by amazing breadth, depth, and scale.

How does India stack up?

E-commerce, cab aggregators, and food delivery startups hog the limelight, perhaps leading casual observers to question the breadth of India’s startup ecosystem. But the most striking observation from my visit relates to the big breadth of sectors covered by India’s startups. Their range includes biotech companies like Mitra Biotech, software as a service (SaaS) startups like Freshdesk and Postman, medical devices companies like Forus Health, digital media companies like The Viral Fever, fintech companies like Zerodha, and many more. Whatever your sector of interest, you will likely find activity in that space.

But what the ecosystem offers in terms of breadth, it takes away in terms of scale.

Even some of the larger and more prominent companies in many sectors have barely reached around $10 million (Rs67 crore) in annual revenues after spending much more. Enterprise SaaS companies struggle to sell to Indian corporations making the domestic market virtually non-existent. Selling globally from India isn’t easy either. Similarly, in biotech, the domestic market has been a hard nut to crack. Most biotech startups are yet to achieve reasonable scale despite raising tens of millions of venture dollars. In consumer markets, there is scale in terms of number of potential users but the average revenue per user is low. Scalability remains the biggest missing piece of the Indian startup puzzle.

Moving on to depth, you can count on the fingers of one hand the number of startups in each sector. The lack of depth is partly due to the lack of scale. It is hard for a market to support lots of players unless there is scale. In addition, one doesn’t see enough specialists across multiple sub-sectors in India. If you just looked at advertising technology (ad-tech) in the US, you could break that market down into multiple large sub-sectors including ad exchanges, ad servers, demand-side platforms, supply-side platforms, etc. Other sectors are no different. The market will have to mature considerably for such specialists to emerge in India.

So what can an entrepreneur do to address these scale and depth issues?

These problems are structural and innovations are needed to address the lack of widespread broadband availability and the inadequate access to digital payment platforms, for instance. The government and large corporations will have a major role to play in this. The success of services such as Reliance Jio, which seeks to roll out a pan-India 4G network, and the unified payments interface will be crucial. The tailwinds are certainly in India’s favor given the many initiatives launched in the past 12 months.

The next few years will tell us whether India can list itself alongside US and China as a startup nation.

Disclaimer: - Following article come from Quartz

The UAE entrepreneur who draws inspiration from other female leaders

ABU DHABI // Souad Al Hosani is an exemplar of an Emirati women who is at the top of her chosen profession.

Born and raised in Abu Dhabi, her entrepreneurial outlook has taken her to the presidency of Nexus Business Services, which provides start-up and operational support for companies; the managing directorship of its Nexus Agencies element, and a member of the board of directors at Safetic International Safety and Security consultancy.

She is 28.

"Sometimes, when I work hard and feel exhausted, I feel like taking a break to refuel myself and be ready for the upcoming days, but I am a workaholic," she says. "I love people and I love business. I can never have a break."

A graduate in human resources management from the Higher Colleges of Technology, Abu Dhabi, Ms Al Hosani has worked as a diplomat at the Ministry of Foreign Affairs, Mubadala Development Company, the British embassy in Abu Dhabi and Abu Dhabi Islamic Bank and Amwal Holdings.

Be Someone, That People Start Admiring To Be Like You

Having completed a training programme for women entrepreneurs, she also received a United Nationals Industrial Development Organisation certificate, while being honoured with a Young Achievers Award by the American Chamber of Commerce in Abu Dhabi. Last year, she was named best female service provider in the UAE.

"After seven years of being in business, I have learnt and enriched my knowledge a lot, with the support of my family, friends, and the community," says Ms Al Hosani.

"My different experiences in the public and private sector have helped me develop, nurture and maintain significant and valuable business and government contacts.

"These opportunities have allowed me to network with professionals around the world, giving me a clear picture of what foreign investors are aiming to achieve by relocating abroad."

Her world is a non-stop one, a whirlwind of meetings and events. But it has allowed her to become a truly global citizen as she promotes the UAE, and gauges the overtures of companies looking to invest in the country.

"I try to switch off at weekends, but I am still available when needed," she says.

The rewards, she explains, are the smiles on her clients’ faces – and the knowledge that her efforts may empower other Emirati women.

"Being a strong female entrepreneur and sharing my experience with people inspires me," she says. "Our leadership has always supported women and encouraged women development on a personal and business level.

"I am so proud about the number of Emirati female leaders we have nowadays – especially our Minister of Youth, who is 22 – and I am proud to be Emirati."

Disclaimer: Following article come from THENATIONAL

Octopus To Raise £70m For Start-Up Venture Investments.

Conventional wisdom is that investors’ appetite for risky smaller businesses is diminished during periods of economic uncertainty and market volatility – they’re supposed to prefer safer bets. Well, tell that to Octopus Investments, the specialist smaller companies fund manager. It’s just announced a £70m fund-raising for its Titan Venture Capital Trust (VCT), with the rider that there is also an option to raise a further £50m should there be sufficient demand.

Venture capital trusts, for the uninitiated, are collective investment funds that attract a special tax status from the UK government – the idea is to cushion the risk of investing in very small businesses with a generous array of tax breaks. So investors get 30 per cent upfront tax relief on their money as long as they hold their VCT shares for five years, are entitled to tax-free dividends, and don’t have to pay any capital gains tax on profits.

Despite these perks, however, VCTs are risky – all the more so since the Government was forced to change the rules of the scheme last year in order to avoid falling foul of the European Union’s State Aid rules. At least 70 per cent of the fund must be invested in companies that are no more than seven years old, have no more than 250 employees, and have assets worth no more than £12m.

In other words, these are businesses at the riskiest end of the market – many are effectively start-up ventures.

Dreaam Big! And Make It Happen With Success

So why does Octopus think it can raise such significant sums for Titan at a time when investors are so nervous? Well, a combination of factors are in its favour. The tax breaks certainly help, particularly since the Government has recently reduced the tax incentives on offer to wealthier pension savers, who are therefore looking for other efficient ways to invest. But it’s also important to stress the attractiveness of the underlying asset class, particularly given that investors get access to it via a diversified portfolio that is professionally managed.
The reality is that in a market place where growth capital is in relatively short supply, VCTs have some great opportunities to choose from. Even talented entrepreneurs with impressive track records don’t have too many options when it comes to raising equity finance – VCT managers are well placed to pick and choose.

In fact, Titan has a good record of doing so. The portfolio consists of around 50 companies at any given time and boasts a number of success stories. This year alone, for example, Titan has sold its investment in SwiftKey to Microsoft and Twitter has bought its holding in Magic Pony Technology.

This is not to suggest that the fund is a sure thing, or that there won’t be portfolio setbacks. The nature of investing in start-up ventures means there almost certainly will be failures. Despite the risks, however, Octopus is confident investors will support its fund-raising, even in this post-Brexit era of anxiety.

As for entrepreneurs themselves, this fund-raising is good news. It suggests the market for equity capital in start-up companies remains open for business – and raises hopes that the best ventures will be able to secure the finance they need to scale up.

Disclaimer: - Following article come from FORBES

Dubai Government Seeks Blockchain Projects for Startup Fund

A technology initiative backed by the Dubai government has launched a $275m startup investment fund (1bn AED) organizers say will likely back blockchain projects.

Announced last week, the Dubai Future Foundation officially opened the Dubai Future Accelerators initiative, a 12-week startup program based in the United Arab Emirates that will seek to encourage innovation in "strategically important" sectors.

A partnership with global investment firm Dubai Holding, the effort is centered around promoting the development of business ideas around six "challenges" in areas like transportation, law, education and public utilities.

The program is now accepting applications from companies seeking to prove a product-market fit for their ideas. Approved applicants, in turn, will spend three months developing pilot projects that are then eligible for additional funding.

Organizers said initial applications include efforts centered on smart meters, smart cities and business process improvements using blockchain.

The move is the latest that finds the Dubai Future Foundation promoting blockchain development. The agency has been among the more active government agencies globally to begin examining blockchain technology, most notably through the Global Blockchain Council (GBC) overseen by its Museum of the Future project.

Earlier this summer, the GBC unveiled seven pilot projects built by prominent area businesses and startups.

Disclaimer: - Following article come from CoinDesk

Fortune Just Launched a Startup Edition of Its Tech Newsletter.

Today’s startups could be tomorrow’s Fortune 500 stars.

Happy Tuesday, dear readers. No, you’re not hallucinating—this is an extra edition of Data Sheet.

Starting today, we’ll be publishing a Tuesday edition. In keeping with our weekend tradition, it will have a theme: startups.

Yes, startups—those fledgling companies building or using technology to create new products, services, or even categories. Startups continue to fascinate us with their ability to turn an idea into an industry. Startups can mint millionaires overnight and topple incumbents just as quickly. They can captivate an entire generation with a simple social app.

Fortune has traditionally focused on covering the world’s largest companies because of their outsized impact on industry. But readers of this newsletter know that today’s startups are tomorrow’s Fortune 500 companies.

Throughout the week we’ll continue to bring you the latest news about Apple, Google, and the rest of the mega caps—not to mention the mega unicorns. But on Tuesdays, we will use this newsletter to showcase genuine up-and-comers whose products could be the next big thing.

After all, even Apple (No. 3 on the Fortune 500) was once just a few guys tinkering with computers in a garage.

We hope you like this new Startup Tuesday edition of Data Sheet.

Disclaimer: - Following article come from FORTUNE