Investing in a new business can generate great rewards further down the line, but while there can be a big pay off, there may also be a pretty big risk involved.
90% of startups fail within the first 5 years, so it’s important to conduct a thorough risk assessment to determine whether or not the possible returns outweigh the initial investment risks. Here are 5 quick tips for assessing startup investment risk:
Determine the value of the startup
Valuing a startup is challenging, but it is an essential part of risk assessment as value works to determine share percentage. It is often best to avoid standard valuation methods for young businesses, as there will typically be very little data that can be used.
Instead, there are a few alternative techniques, such as discounted cash…
