New businesses are being started every day in the UK, in fact over 750,000 new start-ups were created in 2022. Finding and choosing which of these businesses you could invest in can be time-consuming. But, as new companies are starting every day the possibilities for investments across different business sectors are one of the best things about it. Here we will look at how you can find small businesses to invest in.
Background Research
Firstly, conducting background research and understanding the market sector(s) in which the start-up company operates is a good way to reduce risk. You can understand the potential for success and the business plan, technology, or product for yourself. One of the most important things to look for is scalability. With a solid scalable plan in place, you are more likely to see a good return on your investment as the Company grows. One of the most common reasons a start-up business fails is a lack of knowledge in the industry the Company is trying to enter. Ensure you know what the founders are hoping to achieve and how the business will grow.
A Wide Range Of Start-Up Companies
There are so many different early-stage companies to support. Whether you are looking for a new technology company, pharma, e-commerce, or anything else there are plenty of new businesses you could add to your portfolio. Because of the wide range of sectors these new companies operate in it is a great way to diversify your portfolio and potentially reduce risk.
One way to diversify is to invest in several start-up companies within well-performing areas. Technology is a good example of this and the landscape is constantly evolving. With schemes such as EIS (Enterprise Investment Schemes) that provide tax-efficient benefits as well as the potential to earn a return on investment, companies such as Oxford Capital specialize in helping investors gain access to early-stage companies in the UK using the Enterprise Investment Scheme (EIS).
What Is An Angel Investor?
Angel investors are always looking for the next brilliant business to invest in. An angel investor is an individual who provides financial support to early-stage businesses. Typically, the investors are involved in the early stages of a Company’s development when it can be difficult to secure funding from more traditional sources like banks. With so many start-up businesses being created every day there are opportunities everywhere.
Depending on the unique situation, Angel investments can vary in size from a few thousand to several million pounds. It is most common for investors to get involved from the ground up. As well as providing financial support they can also bring valuable experience, networks, and expertise to the table.
Spread The Risk
Taking the time to find the perfect company to invest in isn’t always going to be easy. With so many companies out there, it can be hard to know where to invest. Investing in just one Company can mean you are taking on a large amount of risk. This is why EIS is becoming an increasingly popular choice for investors. EIS offers the benefits of investing in early-stage companies but dilutes the risk by spreading those investments over a number of different businesses.
One Final Thing
The number of start-ups being created each day means the investment opportunities are seemingly endless. You could utilize your existing networks and find start-ups to invest in and be involved with right from the off. But investing in this way can carry huge risks. One of the best alternatives which means you can still support small businesses is to look at EIS. This can help to mitigate risk by spreading your investment. It is worth remembering that thorough due diligence is crucial before making an investment decision.
Read Also:
