An Investor Guide In The New Normal

By Author: Malka Amarathunga
Total Articles: 33
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Investments as seen by investors in a global pandemic

Culminating from the inception, the concept of investing was understood and agreed upon as a,’ give and take’ model. Although, it has now begun to alter its perception where an investment made does not only include startup funding rather it is benefited from a collective purpose. The purpose involves a certain degree of risk that each investment carries with it along with a learning curve for both entrepreneur and investor.
However, as the environment and culture change so would the investment approach is taken. Consider this a vital startup tip. For instance, the pandemic has opened out many options in terms of deliverables to clients through online platforms. Similarly, as technology makes its advancements, so does impact investment and its potential to acquire seed investments.
The benefit of startup investing in the new normal
Typically, if you are to consider which company is likely to have a higher chance of survival or an established business during a pandemic, the answer may surprise you.
The concept of a startup as a whole ...
... is in itself an advantage as decisions plus changes can be made at a quick pace. This is due to its flexible structure from the number of employees, its physical work environments and low customer acquisition expense.
Recognizing good investments

This involves two steps that need to be considered before any investment is made;

1. Picking the startup team: This is imperative as the investment is made based on more than just the solution but also the functionality of the team. The core group should be assessed on their work ethic, adaptability, creativity and ability to strategically navigate through tough situations.

2. Financial estimations: Considering in a normal sense, to invest is to provide startup funding and as a result calculations based on equity and revenue need to be considered. In addition, safety measures of being able to minimize loss should be incorporated with a clear line of the maximum cost that can be incurred to be decided prior.

Keeping an eye on the consumer market

Despite the pandemic and its impact, some of the previous investments and trends may still survive through it. To the point that with a few tweaks in digitalization of some aspects, it can prove to be even more effective.

In fact, fundraising for startups (i.e. through platforms such as www.equitymatch.co) that have solutions based on social causes would prove to be even more profitable than those that have zero social impact. This is due to impact investing, as consumer attraction has altered to the point that they would prefer their expense to be a contributory factor to a sustainable cause. Thereby altering consumption patterns drastically.

Further, technological advancements during the pandemic have allowed individuals to work from home, and focus more on creating their online presence. By doing this, their creativity is further explored as they develop various manners of engagement such as analyzing returns at a rapid pace to predict consumer patterns.

Signs of a potential troubled investment

1. Isolated work environments: Although this initially may bring about an increase in productivity, it could also lead to moments that could interfere with the development of social and soft skills.

This is critical to identify and mitigate as an investor due to it being a direct impact in the future of providing the product or service. Solutions that thrive on social interaction will be inhibited resulting in restricting potential room for growth.

For instance, it is likely that communication issues may arise between the founder and investor where the goals are misaligned. Therefore, as an investor, it is vital to keep in mind that your investment is based on both the solution to the overall wellness of the founders.

2. High expectations: Even though the innovation has made a successful shift during the pandemic by meeting consumer demands, it does not guarantee that it will remain so.

With any pandemic, it should be expected that interest rates and returns would be low and decisions should be based on a pragmatic approach. If an investment is made with the expectation of producing a high yield, then both the investor and founder are setting themselves up for a careless risk.

Regardless, a certain portion of funds should be kept aside in the event the investment does not materialize and monetize into a fruitful outcome.

Taking measured risks…

The pandemic clearly affects how investments are made and so, as an investor, it is imperative to equip yourselves with strategies that can adapt to various situations. As it is key for investors to take calculated risks and know the industry that they desire to invest in.

For instance, factors such as climate change and cybersecurity are taking precedence, most customers look toward investments that fulfil social responsibility.