What to Do If the Startup You Invest In Fails: 5 Thoughts

start up

About 90% of all funded startups don’t make it to IPO (Initial Public Offering). So if you invest in a startup, it shouldn’t come as a surprise if something goes wrong. In the highly competitive world of small businesses, it’s hard to find a niche in any industry.

Funding isn’t the only key to a startup’s success. Many major factors can interfere with business establishment even if everything seems perfect in the beginning.

A failed startup isn’t a reason to give up your investment activities. This type of experience can help you draw useful conclusions to power up further actions. Here are a few things you can learn from investment failure.


1.   Failure is an Integral Part of Startup Investing

If all investments in startups would result in success, we would drown in the number of businesses of all sizes. Since competition is fierce, it’s hard for a small company to survive. You need to understand that investing in a business is always risky, whether you do it directly or through crowdfunding platforms.

According to experts from the crypto crowdfunding platform, Stokr, knowing the risks can help you take full advantage of startup investment benefits.

The key to successful investing is diversification. If you’ve done everything right, such an investment failure shouldn’t affect your portfolio’s bottom line.

2.   Learning All You Can About Startup Failure Can Help

Why did the startup fail? Could you have seen it coming? Regardless of your experience in startup funding, take this opportunity to gain valuable knowledge. When it comes to investing, “what doesn’t kill you, makes you stronger” aphorism works perfectly. But only if you are ready to learn.

In order not to make the same mistake again, try to find some advice. While it can be hard to communicate with professionals investors, use this opportunity to talk about failures. They can push you in the right direction to gaining valuable insights.

3.   Don’t Take Failure Personally

After all, it’s just money. You lose some here; you gain more somewhere else. To become a successful investor, you have to learn to be somewhat indifferent to such failures. While it’s useful to study each case separately to get to the bottom of the failure, there is no reason to mull over.

If you’ve made a mistake, look at it as an opportunity not to make any more similar blunders. If you invest personal emotions in startups, you’ll get burned out quickly.

4.   Recover Your Financial State

A poorly made investment can hinder your financial status. Before jumping on another startup investment opportunity, take the time to recover. If you have other investments in progress, focus on them for a while. Stay away from startup funding until you’ve studied your failure and drawn conclusions.

If you’ve done everything right, and the startup failure didn’t hurt your investment progress, congratulations! You can continue researching investment opportunities. Just make sure to use the information you’ve collected about the failed startup to help you make new decisions.

5.   Focus on New Ideas

While you are analyzing the investment failure, don’t stop yourself from researching other ideas. They can keep your mind off the negative elements. Meanwhile, you can use the recovery time to find some excellent opportunities.

If you don’t feel up to new startup investments emotionally, don’t force yourself. It’s not just a newbie problem. Experienced investors can be put off by any size of failure. Wait until you feel like you are ready to revisit the startup investment niche again. Meanwhile, focus on other investment options.

The Takeaway

Startup investments are risky. More often than not, they fail. When such investment goes awry, it’s hardly a reason to stay away from similar funding options in the future. It’s an opportunity to learn from your mistakes.

When funding a startup, always be ready for failure. Protect yourself with diversification.

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