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Ask HN: How can I invest in tech startups with as little as $50k?

11 pointsby donjuanicaabout 11 years ago
I am a long time developer who has put together a little war chest that I'd like to invest. I'm looking to invest between $25k and $75k into new tech startups but I don't know how to do this. Are there funds that invest exclusively in high-tech startups? Can I approach companies directly? What other options am I overlooking?

7 comments

gregcohnabout 11 years ago
The fundamental problem that you have here, as I think plays out across previous comments, is that $25-75K is not a large enough stake to both diversify and achieve large, life-changing returns.<p>If you&#x27;d gotten 50K into the first rounds of facebook, zynga, twitter, etc, your returns would be in the millions of dollars. But these are extreme outliers, as you probably know. Even if you could confidently choose, from all the angel opportunities out there, a single winner in order to maximize your investment return as a percentage, in the vast majority of cases in which you were able to do so, you probably wouldn&#x27;t get back that many times your money. (For a variety of reasons that are too detailed to go into here having to do with the dilution and preferences that most successful companies take on over successive rounds you won&#x27;t be able to participate in, and for the primary reason that very few companies exit at a valuation greater than $100M.)<p>The two obvious ways to play it are, 1) as others have suggested, to get into a syndicate of some kind. Beyond angellist syndicates (which I&#x27;d second), you could look at becoming an LP in an angel fund or micro-vc fund, assuming you are an accredited investor.<p>The other way to play it would be to wait for opportunities you truly truly believe in or that you have truly unique access to. (E.g. your best friend and roommate from college who&#x27;s a genius is doing something amazing, there&#x27;s a round coming together by the best angels you&#x27;ve ever heard of, and you beg him to let you in.)<p>In the first case, you would decrease your likelihood of losing all your money, increase your likelihood of participating in a success, but not maximize your return.<p>In the second, you have a very low chance of getting it right, but if you do, you will have maximized your return.<p>If you had enough money to put 25-75K into at least 20 different companies, I&#x27;d consider a hybrid strategy where you participate in a syndicate to get smart and to get deal flow, and invest additional dollars side by side, or in subsequent rounds, when you see things that could be home runs.
chaotic_goodabout 11 years ago
I&#x27;m a big fan of fundersclub.com. With a single investment (min 10K) you can hit 10 or so of the best companies from the winter or summer batch of YCombinator.<p>You need an invite to join, and you must be an accredited investor. If you need an invite contact me and I&#x27;ll refer you.<p>By the way, this is very risky and very illiquid. I don&#x27;t recommend investing more than 5% or 10% of your net worth. And don&#x27;t expect to be able to cash out on anything for 5 to 7 years.
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sharemywinabout 11 years ago
I wouldn&#x27;t invest more than 20% of your total savings in something that high risk. Basically what you can afford to lose. And your going to want to make sure you spread it out enough to cover the risk. and it that works out to like less than 10k per investment and 20 investments I&#x27;m not sure your going to get your desired result. Even that could not work out so well. That&#x27;s even if they want your money.
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brianmccabout 11 years ago
Are you looking for a good, solid investment plan, or are you taking a punt that you could hit it big? Or, are you more motivated by helping someone get a start that otherwise might not be so forthcoming?
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andymoeabout 11 years ago
You are overlooking the most obvious option: Start your own company. That&#x27;s what I did and it&#x27;s pretty awesome so far. More work than I ever imagined but awesome all the same. :)
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justplayabout 11 years ago
I am struggling for external-investment, if you&#x27;re interested we can talk. I am registering my company in next month.<p>I am 23 year old and my business model is based on India and it is million dollar business. Because of this, none of the investors are showing interest. (hell, i can&#x27;t even apply to YC because they usually fund to idea which somehow benefits US economy). I have never visited any foreign countries, i haven&#x27;t really sure how much valuable my idea is outside my country. Certainly i see big growth. And, i am not looking for big funding. 20k-40k is suffice .<p>If this sounds good, we can talk future at paritosh@15as.com
massappealabout 11 years ago
you should look into joining an Angellist Syndicate
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