Comment: Simon Slade
Investing in startups is a win-win for businesses looking to both expand and establish themselves
as industry leaders.
Investing in startups is a win-win for businesses – including telcos – looking to both expand and establish themselves as industry leaders.
As their own businesses thrive and grow, entrepreneurs have a unique opportunity to invest in other startups in their field or even in a completely new industry. This type of investment can be a hugely valuable experience that provides exposure and networking opportunities, not to mention the potential return on investment.
As with any investment, timing is everything. Early profits should go back into growing your business, but once you have some stability, it’s time to diversify. Here’s why entrepreneurs in all industries should consider investing in other startups.
Entrepreneurs have a unique ability to assess risk
You’ve done this before. Once you’ve brought a business idea to fruition, you intimately understand the process and detail that go into making a venture
Investing in startups can pay dividends for even large companies,
says Simon Slade.
successful. This allows you to assess the risk of your investment with greater-than-average knowledge. Even outside of your industry, your business acumen as an entrepreneur will aid you in making smart investment decisions about which startups to support.
Investing in startups keeps you updated
When you are working with fresh, new businesses, you stay fresh and up to date. Investing in a startup allows you to get involved with cutting-edge trends and learn from younger, more green entrepreneurs. These people and their businesses have a lot to offer you in the way of continuing education and consumer awareness. New businesses are answering new demands, ones you might not even be aware of yet. By staying involved with the startups, you stay more connected to consumers and what they really want—something that changes every minute.
Perhaps nowhere is this rapid change more apparent than in the telecommunications and tech industries. While it’s smart to invest outside of your industry as much as possible, tech entrepreneurs have so much to gain from investing in startups within their industry. A streamlined connection to the newest and freshest ideas in the tech world is a major advantage for any established business. It’s easy to become irrelevant in such a rapidly changing industry, and investing in early-stage businesses makes that far less likely.
When the owner of a software company in America invests in a telecommunications startup in Nairobi, she not only gets a new audience by branching out of her industry, but she also gets a new audience geographically. While a company might have decent local or even national awareness, branching out via investments can provide international recognition.”
Investing in a startup can improve life for you and your team
Part of the reason I was eager to invest in Swift Med, a virtual GP clinic, was because I could directly see the benefits of this business on a personal level. The convenience of a virtual doctor’s visit is unbeatable, especially for people with busy schedules and lots of demands on their time. I’d rather spend an hour with my kid than an hour waiting in a doctor’s office, and Swift Med makes that possible.
Your investment in a startup can ultimately have an ROI that appears as more than just dollars. Investment can support a business that ultimately makes life better for you and your employees.
Investing in a new business is perhaps the ultimate networking activity. When you discover a small, innovative company that inspires you, you’re going to meet the people associated with that company. These people tend be excellent connections that can provide fruitful growth. They might be future customers or clients for your existing business, or even future business partners for a new venture. Even if you never formally work with any of these new members of your network, they can provide you with inspiration, advice and resources that will make you a better entrepreneur.
Exposure for your business (es)
Investing in a startup can also be seen as a marketing move for your existing company or companies. By expanding your network as an entrepreneurial investor, you get your name –and the name of your company – in front of a broader audience.
When the owner of a software company in America invests in a telecommunications startup in Nairobi, she not only gets a new audience by branching out of her industry, but she also gets a new audience geographically. While a company might have decent local or even national awareness, branching out via investments can provide international recognition.
I’m not advising entrepreneurs to simply invest. I’m an advocate of intelligent investment, in which you carefully consider risk, build a relationship with the business owner, and participate in protecting your investment once you’ve made it. Investing is an active process – not simply throwing money at the wall and hoping it sticks.
About the authorSimon Slade, CEO and co-founder of Affilorama, an affiliate marketing training community; SaleHoo, an online dropship and wholesale directory; co-founder of Smtp2Go, an email delivery service and investor in SwiftMed, a virtual GP clinic.