Most pundits christen it as the ultimate gamble. It is also the fodder for the future. The returns can be ridiculously sweet if you hit it big. I’m talking about technology. Most of the top 10 biggest tech giants are barely 20 years-old. Within that time, they have turned modest investments into billion-dollar conglomerates.

Each of these tech giants will tell you of a very charming story of how they bet on the idea of the future. What most of them will never tell you is the number of similar startups that have since exited the market since they started. Before you activate that gallant mode, here is what you need to consider.

 

Understand the risks

Even experienced venture capitalists don’t have a perfect record. Most of them will be comfortable with anything above 50 percent. It means, for every $100 they invest in startups, $50 would land in a furnace.

Another statistic worth mentioning is that at least nine out of 10 startups close shop within the first five years. Half of those firms go down due to poor business strategy. Technology catches others napping and whitewashes them.

The risks are grievous. Unlike established companies that can shed some of their value then recover, once a startup closes shop, that is the end of the music. It doesn’t matter how much you have invested.

 

Know the law

When it comes to investing in startups, only wealthy people were able to invest. However, since the passing of the JOBS Act, almost anyone can invest. However, you must qualify to do so. The qualification is simple, an annual income of at least $107,000 or a marching bank balance.

At that level, you will qualify to invest $2,200 or 5 percent of your annual salary. As you work your way up the income ladder, you can invest more. To invest, you can invest in companies that SEC and FINRA clear for debt or crowdfunding.

However, an SEC or FINRA clearance is not a guarantee that the startup will succeed. Their role is to ensure that the companies are in legitimate business. You have to do your due diligence before you invest.

 

Get in your industry with your money

It is not mandatory to invest in tech firms targeting your area of expertise. However, experts recommend that you do. Part of suave investment is to interrogate company finances, products, and methods.

If you are a doctor, can you competently interrogate a financial technology product? Maybe not! If an analytics startup tells you they have the most exciting data catalog in the market, you probably should do some research to assure they are telling the truth. But where would you do that research? My point is this: Invest in an area that you have pertinent information and knowledge. It may be a hobby or your spouse who has some connections there. However, it should be something that interests you.

 

Start at the bottom

Be realistic about your chances. Most startups take at least seven years for them to pay out their angel investors. Popular checkouts are IPOs or buy-offs. Startup investments are therefore long-term investments because it takes quite some time to get a payday.

Getting reach quickly is a possibility, but the chances of it happening in the first three years are minimal. Therefore, you will need to spread your risk by investing in several startups.

The best place to start is through crowdfunding initiatives so that you can get the hang of it. You can choose from existing platforms . Some will allow you to invest more money than others do. Some will even offer you guaranteed returns on investments.

As you grow in stature and experience, you can move on to elite levels. Who knows, one day you might become a venture capitalist.

 

Conclusion

Startups investment is for the bold. You have to hope for the best but expect the worst. Invest what you are ready to lose.

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Every entrepreneur aspires to launch a business that will lead to long-term success. Legal requirements are a critical element to consider when starting a business. However, most people are willing to risk it all by starting a business without following the legal process. Apart from having a viable business idea and a good plan, there is a variety of legal issues that you need to put into consideration. Below are some legal concerns you need to address before starting a business.

 

1. Business structure

The first step in establishing a business is determining the legal structure. Some of the most common legal structures include partnership, sole proprietorship, etc. There are certain factors that you will need to consider when selecting the business structure. For instance, the amount of control you intend to have. The legal structure determines the type of license and permits to acquire and also tax considerations.

 

1. Agreements

Apart from the sole proprietorship, most of the other legal structures require agreements to stipulate the rights and obligations of the parties involved. The agreement should contain a non-compete clause that prevents the sharing of sensitive information to competitors. Additionally, it is also essential to include a buy-sell provision that indicates the procedures for distributing interest of the parties involved. This ensures the business continues even if one of the partners departs. Also, a business that deals with vendors should consider non-disclosure agreements to prevent sharing of information to third parties.

 

iii. Intellectual property

If your business is involved with new products and ideas, you should consider intellectual property protection through patents, trademarks or copyrights. The US Patent and Trademark Office (USPTO) was established under the Department of Commerce to issue patent and register trademarks.

 

Patents and copyrights provide the business with the rights to use the products and services. In the event of infringement by other individuals or businesses, you can file a lawsuit in the court of law.

 

1. Employment law

Employees provide a critical role in the success of the business. Therefore, business owners should familiarize with the various rules regarding employment. For instance, the Civil Right Acts of 1964 indicate that it is illegal to discriminate against employees based on color, race, gender or religion. Additionally, the Employment Act makes it illegal to discriminate against employees above 40 years. Also, the Americans with Disability Act protect individuals living with disability from discrimination and harassment in their places of work. Other employment laws include medical leave, equal pay, etc. Employers must also comply with wage and hour laws when compensating employees. For instance, the Fair Labor Standards Act stipulates a minimum wage of $7.25 per hour and even over time. Every state has laws regarding minimum wage

 

1. Liability lawsuits

Most brick and mortar business are faced with liability lawsuits from customers, vendors or even employees. As a business owner, you have the responsibility of taking care of everybody in the premise. Accidents are inevitable and can occur due to wet floors, broken stairway, etc. Therefore, it is necessary to protect your business from lawsuits by obtaining liability insurance. The insurance company handles compensation of the victims on your behalf and also caters for the legal fees in case of a lawsuit.

 

In conclusion, due to financial constraints, most entrepreneurs are tempted to ignore legal issues when starting a business. However, they only consider help when trouble arises. An attorney will help you with the all the necessary legal documentation and advice required to start a business.

 

For entrepreneurial legal services, contact utah trademark attorneys. They will help you properly start your business and navigate all legal hurdles.

 

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