But before you hit the "invest" button, heed the following.
Assess your risk tolerance and knowledge of the industry. "If you aren't in the industry, you should run the venture past at least five executives who are, and [then] develop a competitive map of the landscape to identify your prospective investment fits in," said Adam Kirsch, a serial entrepreneur (Daily Beta Media, Yorango) and former start-up investor with 1010 Capital and BR Venture Fund.
Determine your risk tolerance, since your investment may be illiquid for a decade or even lost. To get used to this reality, Kirsch recommends making a few smaller investments first so you can get comfortable losing a little.
When we think of tech start-ups, for example, they are usually in a pre-revenue stage, which means it might be a while until they start making money, said Cheree Warrick, owner of the Virginia business consultancy The Profit Partner. When they do, it could be the "big one" and if they never do, it could be the loss of a lifetime. If this idea is hard to stomach, choose to work only with start-ups with revenues, she said.
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"No matter what, remember you're not in the driver's seat, nor should you be. The entrepreneur is," said Kirsch at Daily Beta Media and Yorango.
Consider a "debt" investment. If letting go of your funds for up to a decade is too risky for you, consider offering a start-up a loan instead.
"You can receive 10 [percent] to 15 percent interest on a small private loan to a start-up business that has been around less than two years," said Warrick at The Profit Partner. "Most banks … will not lend to a start-up until they have three years of financials.
"The entrepreneurs have great credit but may be 'unbankable,'" she added. "Private investment can be a great route for them and you."
You can do this through various online crowdfunding platforms, on which the companies set the terms, or have an attorney draft documents for you that include provisions for collections and guarantees.