The Art of Investing in Startups: Insights on Recognizing High-Potential Companies

Millions of dollars or having a lot of money doesn't mean a success to your investment journey – even smaller investments with the right decision can guarantee you success if you enter early and find the right startup. Although early-stage companies can give you some hope of a successful investment, not every opportunity is worth the risk. Here are tips on recognizing high-potential companies to invest in.


Networking is a must
Every great investment comes from a wide range of resourceful networking. A successful venture capitalist needs to build their personal and professional networks. This is essential for them to have a “robust flow” that contains the rate of investment opportunities that will pitch to them. So, for the newcomer, just take time to connect with other investors and make sure what type of opportunities to look for.


Another valuable tip is, take the courage to invest much smaller amounts of capital into new seed, early stage startups. This is a much safer way for new investors to lower the risk of their investments.


Take an eagle view, a bigger picture
A potential investment or great opportunities will be easier to catch if the investors think beyond the initial pitch. Take a high-angle view, look at the bigger picture. See if there is a potential market or competitors in the same space. Another thing that is also important for the new investors is to consider the customer's perspective and anticipate any potential issues that may arise in the future of product or service. Since startups may only present a narrowed or specific view of their proposal, it’s necessary to think outside of the box.  


Know your limits, set the guidelines
As the investors start an early investment stage, it is necessary to know exactly what they’re looking for and capable of. Take a step back and write down a list of challenges that may occur in the future. The challenges could be like reviewing hundreds of proposals or pitches that may give a distraction. So, in order to keep on track, the investors need to set the guidelines that keep them being analytical and objective.
Analyze the risk and find the right community

There is no success without risks, including in an early-stage investment. Risks can come in different forms, including operational, technical aspect, dynamic of the team, or intellectual property-related risks. But, if the newcomers are not familiar with the technology or the dynamic itself, it’s necessary to seek expert opinions or find the right community, such as a pool of investors. TMI (Telkomsel Mitra Inovasi) – part of T-Connext – is a hub for investors and startups to meet to define their mutual interest in building leading technology companies. So, whatever industry you are into, just get the right community to start a collaboration.