I invest in small business start ups. This is, admittedly, a small portion of what I do. I have currently invested in 3 small start up businesses and am currently considering a fourth.
I was able to exit the first one fairly quickly after the company pivoted from their initial plan and offered to buy out my shares for more than double what I had paid. The 2nd and 3rd companies are humming along nicely. I only own small minority positions in these companies and I do not participate in any decision making or management.
It’s a fun way to invest but of course highly risky. If these companies go big, there are big rewards to be made, but most business fail or remain small, so there is a good chance of losing money or just losing the opportunity to use that money elsewhere.
I find that having money in some of these long shots can make life a little more exciting. Of course you should only do it with money that you can afford to lose, but in my opinion, it’s worth doing at least on a small scale like I do. You’ll want to do your due diligence on the company, the founders, and the sector, but in the end you have to make you best guess on the risk vs reward.
I’ll of course keep you updated here on how these investments turn out, but for now it’s just a waiting game as the companies work to continue to grow.