Top 5 most popular
Startups
7% of MoneyMade members invest in Startups
Growth by Industry
Ranking
1yr Growth
Investor Interest
#1
Food & Beverage
+7.0%
#2
Consumer Goods
+4.4%
#3
Healthcare
+1.3%
#4
Finance
-13.6%
#5
Information Technology
-19.2%
#1
Food & Beverage
1yr Growth
+7.0%
Investor Interst
#2
Consumer Goods
1yr Growth
+4.4%
Investor Interst
#3
Healthcare
1yr Growth
+1.3%
Investor Interst
#4
Finance
1yr Growth
-13.6%
Investor Interst
#5
Information Technology
1yr Growth
-19.2%
Investor Interst
NaN%
Industry Growth
The Food & Beverage sector has seen 7.0% growth over the past 12 months. Of the 12 industries tracked by MoneyMade, Food & Beverage is ranked #1 for the top growing industries.
Growth Rank
#1
Investor Interest
Trending Investments
Allocating 5% to private growth companies could increase the returns of a traditional portfolio by 12% and lower volatility.
Angel investors manage to 2.6x their money on average. Assuming that the average time to exit is five years, 2.6x equates to 21.1% annualized returns
There are few asset classes that offer the homerun potential of startup investments.
You’re funding the future! Startup investing provides the opportunity to invest in innovation and to feel real ownership in the companies that you invest in.
Reasons to Invest
Explore Startup Platforms Now
Highlights
Good For
High risk, High return
Time Horizon
Long (10+ years)
Earnings from
Acquisition or IPO
Liquidity
Illiquid
Roughly 90% of startup companies will not make it to year 10. But when a startup does go public or is acquired, investors can achieve returns of 1000% or more. Endowment funds typically allocate about 20% to 40%, and high net worth individuals allocate over 20% of their portfolios to private equity. Private equity funds invest in a large number of promising startups in order to diversify their risk exposure to any one company.
0 - 1,000% +
Avg Annual Returns
Past 10 years
Ways to Invest
Want to keep it traditional?
Check out this large Private Equity firm in the stock market
Risk Analysis
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Risk Analysis
Investing in startups is great for those who have the appetite and capacity for the high risk involved. The High Risk score given to startup investing is based on factors which include illiquidity, the term your capital is tied up for (often 10+ years) and success rates of startups being low. Investing in startups can be extremely lucrative when backing the right company. One of the intrinsic benefits to investing in startups is that you are helping others grow their business and are part of the journey, which can often be exciting in itself.
Compared to:
Residential Real Estate
Low
Gold
Low
S&P 500
Low
Drawbacks
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Investing in startups is extremely high risk. It's one of very few investments that could potentially 100x your money, but in many cases, your investment will go to zero.
In order to properly diversify and manage risk, you want to spread your investment out over at least 5 or 10 different startups. This usually requires a fairly sizable initial investment.
Most retail investors don't have access to startup investments. This is changing thanks to crowdfunding platforms, but if you're looking to gain access to rooms full of VCs and angel investors, that will take time and money.
Drawbacks
Not the right asset for you?
How You’re Taxed
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How You’re Taxed
Capital Gains
Income Tax
Profits earned from investing in startups are taxed like stocks. Investors are subject to short-term capital gains when selling investments held for less than a year, which are taxed at ordinary income tax rates. Long-term capital gains are applicable when investments are held for a year or more with tax rates ranging from 0% to 20%, depending on your total taxable income.
Rules of Investing in Startups
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Rules of Investing in Startups
Non-accredited investors should be aware there may be a maximum amount you can invest in crowdfunding ventures during any 12-month period, according to SEC guidelines:
- If your annual income or your net worth is less than $107,000, you can invest up to the greater of $2,200 or 5% of the lesser of your annual income or net worth.
- If your annual income and your net worth are equal to or more than $107,000, you can invest up to 10% of annual income or net worth, whichever is less. This amount, however, cannot exceed $107,000.
Experts generally also recommend making several small investments in a few different startups versus one big investment in one startup. In fact, AngelList even writes in its investing guidelines that you should “only invest if you have enough capital to make 15-20 startup investments.”
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Did You Know?
Oculus started its journey with a crowdfunding campaign. In 2014, it was purchased by Facebook for $2 billion in 2014.- Peloton started making its indoor exercise bike after raising $307,332 in a 2013 crowd-funding campaign. It’s now valued at $28 billion and traded on the stock market.
- Uber's seed round netted them $510,000 with a valuation of just $3.86 million. A number of Angels invested with amounts as low as $5,000 into this round. This investment would now be worth north of $25 million.