Woke up this morning to hear some good news. According to reliable resources the U.S jobless rate has fallen below eight percent; The rate has fallen because of a combination of job creation and people simply giving up in finding jobs. Within the group of those that have given up there a few who decided to create their own wealth. This truth brings me to an article I saw on CNNmoney.com called “Investing in startups: More fun than profit “. A great point made by the article is that investing in a startup will not always provide a big return of the initial investment; in their own words the author of the article wrote the following;
The risk: The majority of startups don’t make it in the long run. “I get calls where someone may have inherited $50,000,” says Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire. “I tell them, ‘You’re not going to find the next Google. Put it in a bank so you don’t lose it all.’ “Risk aside, retail investors have limited options to get in early.Venture capital funds invest in young companies that typically have a track record, but you need a net worth of at least a million dollars and must be able to put up $250,000. And while anyone can back an entrepreneur with a dream, “angel” funds, which diversify their holdings among startups, also restrict themselves to high-net-worthers.
If you aren’t a high net worth individual but would like to get in on funding startups the article suggests looking at something called Business Development Companies (BDCs). The way BDC’s work is by buying equity or convertible debt in startups. The investor may receive interest payments or dividends, or get a future payoff via an initial public stock offering.
Creating your own fortune requires initial investment which highlights the importance of saving for a raining day. I like to think starting a business as social activism because you are contributing to society. Considering the dismal economy I think that now is the perfect time to create your own fortunes; specially for those new college graduates. Please click on the picture to read the full CNNmoney.com article.