Investing in Startups
When seeking out new opportunities, equity funds and private investors explore many options. Like so many funds, everyone seeks out the new exciting product that could revolutionize the market. Investors hope to find the next Airbnb, which could change how people interact with an industry. Investing in startups can be a fantastic opportunity for capital venture funds to expand into new markets.
From a financial perspective, investing in startups is a risky endeavour. However, the potential for return can be huge. Marat Mukhamedyarov is a managing partner in Good News Ventures, a firm that invests in early-stage technology companies. He is also chairperson of York Angels, a not-for-profit group which provides investment advice and support to entrepreneurs. He recently formed part of a panel of investors at OPN’s PitchIT night in Toronto where we spoke to him.
Strong Ideas from Strong People
Mukhamedyarov believes that a great startup is identified by the people behind, as much as the business idea. When he invests in a startup company he says “we get to know them, we help them to identify the challenges. By the time we make an investment, we know who is in front of us. We know whether they are an entrepreneur or not. We mitigate the risk by knowing the person. Our results speak for themselves. We have a 300% rate of return on our investments.”
The drive of an entrepreneur appears to be an essential factor for investors who are seeking new opportunities. There are a lot of challenges for people who are hoping to establish their own company. There are certain skills that startup businesses need to learn along their path to success. That was one of the founding principles of OPN when launching their PitchIt events. Jeffery Potvin, the founder of OPN says that “we’re big about entrepreneurs wanting to help entrepreneurs. We find there are a lot of regular people coming to all of our events. People are asking great questions. They’re engaging startups. They’re sharing, meeting and introducing other people to each other. It’s become a great little ecosystem.”
Marat Mukhamedyatov believes that 80% of his investment decisions are based on the strength of the individual or team involved. “There are certain skills involved so mentoring is instrumental in building startups. Especially when you are young and you don’t know where to go. It is a process of trial and error. Having access to investors, who not only invest but who also help with the connections and help with advising. That is really instrumental in building a successful company. It helps entrepreneurs make fewer mistakes,” he maintains.
Investing in startups is not just about the potential financial returns. Becoming part of the wider entrepreneurial community is also an essential aspect. York Angels bring investors together from a number of different expertise and industries. In doing so, they aim to improve the ecosystem of the startup community. Mukhamedyatov believes that his experience as a serial entrepreneur allows him to impart knowledge on to people who are beginning their business career. He is also very proud of the work that York Angels carry out. They now have over 80 members and are one of the largest angel groups in Canada.
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