Got cash? Invest in a start-up

Did you know that in the first quarter of 2015, Indian start-ups have raised $1.7 Bn from investors? Almost every other day a new start-up idea is funded. Click here to check the list of all funding and investments which happened in 2015. The sheer numbers, the ideas and innovations will blow your mind away! Interestingly, as I read through this list, I recognized that they were all pointed solutions to a specific customer need / problem area and as relevant to the Indian market. Pretty cool!

Several weeks ago I came across another interesting article which highlighted that Top global banks have ear-marked 100Mn$ each to invest in start-ups. The article piqued my interest simply because a bank is in the business of protecting and compounding its own money and the money of its customers. To meet its business objectives, most banks invest in diverse financial instruments to manage their risks and to ensure that they meet their financial obligations. So it seemed interesting when a bank itself was putting its money in a start-up! – not as a loan, but as an investor. That really was an indication of something more significant.

Interestingly I’ve also read news of Indian companies investing in start-ups. From Wipro which has ear-marked 100 Mn$ invest in start-ups to Infosys which has set aside 250Mn$ for start-up investments to Mr.Ratan Tata who is funding start-ups – It appears that even Indian IT companies and CXO’s / business leaders are investing in start-ups. Whether it is purely a financial investment or a business decision to diversify the business portfolio or to be a part of the next big innovation – I can’t say for sure!

Also not to mention, high net-worth individuals are also funding start-ups. From Bollywood celebrities (like Amitabh Bachchan’s investment in JustDial which grew 10K% times in value to Karisma Kapoor’s investment in BabyOyethere are umpteen examples of Bollywood stars who have invested in new start-ups.

It appears that investing in start-ups is soon emerging to be a serious investment option – from banks to corporates to (groups of) individual investors. By simple logic, if you have cash and have already made investments in real-estate, shares, other financial instruments, gold and possibly your own enterprise too, what can you do with any residual cash that you have? Invest in a start-up stands out as a good option – given that India is now a fertile ground for ideas and innovation, and being an entrepreneur is cool!

On the other hand, ever since I have been active on LinkedIn over the past few months, I’ve observed a lot individuals in my professional networks have updated their profile to read as “VC [Venture Capitalist] / Mentor to Start-ups”.

So two things emerge strongly. One, the start-up industry has never been more vibrant – with ideas, big dreams, willingness to tread the uncharted waters early in life, a quest to be part the next BIG things. Two, everyone is keen to be an investor in start-ups. So even if you don’t have the next big idea or experience or inclination to start your own venture, you can play a part in the start-up community by funding them! After all, money power speaks many languages… Right?

So what is the new age mantra for those who have some extra cash? | Invest in a start-up.

What do you think? Leave a comment to let me know

First published on LinkedIn


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