Unless you have the capital to buy into an investment group as a partner, there’s a more specific route to becoming a private equity investor. Otherwise, you will have to become an accredited investor and, once you qualify, you will have to join an angel investing group. In that situation, you will join together with other accredited investors and, as a group, will view presentations from entrepreneurs to determine which projects show the most promise.
Learn About Business
The first thing you have to do is learn what it takes to make a successful business, so you will be able to identify projects that have the best chances for success. This means learning about financial analysis, business management principles, and marketing. You can either take courses to obtain a more formal education or learn from other angel investors.
Determine if You Can Afford a Loss
Your next step towards becoming a private equity investor is to take a look at your finances. Be aware that as many as half of the new businesses in the market fail within their first five years. If you can’t afford to lose between $10,000 to $25,000, you should reconsider pursuing this endeavor.
Consult the Angel Capital Association
The ACA will help determine if you qualify as an accredited investor and, if so, will supply you with a list of angel investment groups. From there, you can browse the group listings to learn more about each one. This will help you find a group that appeals to your interests and goals.
Invest on Your Own
If you can’t find a group that appeals to you or your goals don’t align with any specific organization, you can invest on your own. There are likely plenty of businesses in your community that need start-up money or financing to improve their services. You can invest as an individual and find lucrative opportunities that might not be available through an angel investment group.
While there are many routes you can take to becoming a private equity investor, none of them should be pursued blindly. Instead, make sure you do your research and gain a thorough understanding of each investment opportunity. While risk can never be completely eliminated, you boost your chances for success by taking the time to analyze each investment opportunity.