Invest in startups: Insider tips to pick a winner
Expert tips for choosing startups to invest in: green flags to look for and crucial questions to ask. A must-read guide...
Becoming an angel investor isn’t just about throwing cash at the next “big idea” and hoping for the best. It’s about smart strategy, thorough research, and hopefully even a little tax relief cherry on top. If you’re ready to spot the next unicorn (or at least avoid sinking money into a donkey), here are three essential steps to prepare you for your next (or first) angel investment.
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Sign up nowBefore you start looking at potential investment opportunities, take a step back and decide on your investment strategy. You don’t need to have every detail nailed down, but a basic plan can help you stay focused.
Here are some questions to ask yourself:
Having a clear sense of direction helps you navigate the seas of investment opportunities with confidence and purpose.
Zlatina TrifonovaMake sure a company has obtained SEIS/EIS Advance Assurance before you invest. This is your golden ticket to tax breaks. It’s pre-approval from HMRC that the company meets the criteria required for you to get a tax break by making the investment. But remember: SEIS/EIS Compliance is how you actually get your certificates for the tax relief, so make sure the company completes this process after you invest and receive your shares.
SEIS/EIS Specialist,
As an angel investor, you might be able to claim SEIS/EIS tax relief if the company and your investment are eligible. The UK government created the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) to encourage investors to invest in high-risk startups. Some of the benefits include deducting up to 50% of your investment amount from your Income Tax bill, no Capital Gains Tax on your profits and more.
You’ll need proper paperwork in place to claim your tax relief:
Due diligence means researching and verifying the business you’re considering investing in. This step is crucial and can make or break your investment. Think of it like vetting a potential business partner or a new hire — you wouldn’t jump into it without thoroughly checking things out.
What should you focus on? Here are some pointers:
Take your time here and don’t be afraid to ask tough questions. After all, you’re the one taking the risk.
As an angel investor, your network is your superpower. From co-investors to founders, building relationships will not only help you find the best deals but also increase your credibility as an investor. Join angel syndicates, attend pitch events, and keep your LinkedIn profile polished. After all, who you know can be just as important as what you know when it comes to angel investing.
A vibrant network gives you access to more opportunities and allows you to tap into shared knowledge. Plus, sharing the ride with other experienced angels can make the journey less lonely and more fun.
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