How can venture capitalists get money back

Invest in startups - high risks & high returns

Invest in startups as a creditor or investor

If you have gripped the founding gene, then you can either found one yourself or you become an important piece of the puzzle for a successful start-up by providing capital to your chosen startup.

As a potential funder, you have two options for investing in startups. Either you become a creditor by making capital available to the startup as a loan for a certain period of time and generally receiving a comparatively high interest rate. The second option is for you as an investor to participate directly in the company and thus become a co-owner.

Earn high returns as a lender

If you invest in startups as a creditor, you lend money to the respective company and receive mostly high interest - in some cases you receive up to 15%. In order for the startup to be able to pay the interest, it must generate sales and profits relatively quickly - otherwise it will be difficult either to pay the agreed interest and / or to repay the loan. It is therefore important that you, as the creditor, carefully check whether the startup is even able to pay the agreed interest and make the repayment.

Auxmoney: platform for startups

If you want to invest in startups as a creditor, Auxmoney, the platform for startups, is a good choice. As with all high-risk investments, it makes sense to diversify your investments. Do not put everything on one card, rather invest several smaller amounts in different startups.

You can find more information about the possible returns, risks, etc. here.

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Benefit from the start: participation in a startup

The alternative to the loan for startups is participation in startups. With a participation, you become a co-owner and benefit from a positive course of business. Conversely, this also means that you bear the full risk as a co-owner in the event of an unpleasant business development. What you should also bear in mind is that your capital will normally remain tied up in the company for several years and you should not expect any dividends, at least in the first few financial years, as the surpluses are usually required for company growth.

You can invest in startups either through venture capital funds or as a business angel. An interesting alternative is the so-called crowd investing, where you can participate in startups with small amounts. The following internet portals have specialized in crowd investing:

  • Seedmatch: Seedmatch is the leading crowd investing platform in Germany. Numerous interesting startups have already been financed through Seedmatch. You can find out more about Seedmatch here.
  • Companisto: Companisto is one of the established crowd investing platforms in Germany. You can find out more about Companisto here.

In addition to the two platforms, there are a number of other ways you can get involved in startups. Here you can find out exactly how you can get involved in startups and what to look out for.

Investing in startups: weighing up opportunities and risks

To be part of the next company like Facebook or Google right from the start - this is probably what almost every investor dreams of. The fact is, however, that an investment in a startup often harbors great potential but also high risks at the same time. The following applies: the earlier the company phase, the higher the potential and thus also the risk - the well-known risk / return principle of the financial sector also applies here.

3 questions before investing in startups ...

You should answer the following three questions before investing in startups:

  1. Risk tolerance: Can I financially cope with a total loss when investing in a startup?
  2. Risk Tolerance: How Much Am I Ready To Invest In Startups?
  3. Investment motivation: is it about generating a high interest rate or a high increase in value?

If you can answer the first question with an unequivocal yes, then the second question would be how much of your savings you would like to risk for a startup investment. It is generally not advisable to invest all of your money in startups, as the risks are comparatively high.

With the third question, decide whether you want to invest in startups as an investor or as a creditor.

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.