Ten commandments for investments in private companies

In the first stage, it is important to understand - investments are the way through which various companies and especially high-tech companies raise capital that allows them to grow and develop. The funds are usually intended for product development and international marketing, patents and more. In some cases, there are orders and signed contracts with customers that significantly reduce the risk.

Have you found a company that interests you and you want to invest in ? Here are the ten commands to an investor in a high-tech company who wants to reduce risks and increase the likelihood of a particularly profitable investment.

Transparency is the name of the game

Choose companies whose field of activity matches your values ​​and you have an idea of ​​its activities. That way, you can engage with the company and its owners and understand where the wind is blowing.

Transparency is the name of the game

As part of communicating with the company, please note that even before deciding whether or not to make an investment, you receive all relevant information. A company that is maintaining transparency towards its investors indicates a high degree of reliability and a high level of fairness in management.

 Business Plan

High-tech companies sometimes tend to ignore or embellish the principle of reality. Notice that you are getting a detailed and logical business plan. Make sure you are thoroughly vetting the investment that seems worthwhile and that the business plan you have made is logical.

On the way to an Exit?

The goal of any investment is to make a good profit. Make sure the company you are going to invest in understands and knows how to make good profits and also has a clear strategy for Exiting.

Employee care

High-tech investments are basically human capital investments, and another way to understand what you are investing in is the company's employees. In the high-tech field, employees constitute a significant axis that influences the company's conduct and success. Thus, ensure that the company in which you invest, invests in its employees, gives them status that fits their education and role, maintains agreements and legal provisions regarding the employees, and request to have all the data related to the employee situation, including the labour agreements.

Mixed communication

Note that as part of the investment in the company, you purchase yourself a right to be involved in the future management arrangements of the company and therefore it is worth noting how the company makes management decisions, and how communication between the managers takes place. Proper communication and a healthy decision-making process will enable you, as the investors, to integrate into the process and engage as you see fit.

Receive real-time information

As future investors, you have the right to receive current and up-to-date information on the situation and state of the company. Make sure in advance that this is part of your communication process with the company and that there is no disagreement about it. A company that prevents you from getting current and up-to-date information is a company that should probably not interfere in, and certainly not to invest in it.

What are you getting into?

As part of the many vetting processes you take, just a moment before investing in a high-tech company, it is important to check if there are any disputes or lawsuits that concern the company or any of its owners. Disputes are indicative of improper management and can lead to loss of profits, so it's important to make sure that you do not enter with an investment into an unsolvable dispute .

What does the media say?

Investments in general and in the high-tech field in particular, have everything to do with the visibility and reputation of the company, so it is advisable to monitor and map the company's performances in various media, such as search engines or economic newspapers, and to check what is written about the company, how it is reviewed and what is known about it.

Due diligence

Once we have addressed all these points, it is important to perform the due diligence fully and responsibly. This is your only way as investors to ensure that the company is properly managed and has all the necessary licenses so that your investment is secured in the best way.