What are the risks of early-stage investing?

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What are the risks of early-stage investing?

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Companies and investors can be unaware of the legal setting, especially for early-stage investments

Companies that start well can fall apart later due to leadership failure

Some technological advancements are theoretically possible but are not proven yet

Most of ambitious ventures fail (especially technology companies)

When participating in early-stage investments it can be difficult to determine the state of a given project and the hype cycles

People may not have the necessary background to evaluate projects

External factors outside of anybody's control can be an investment risk, such as banks failing or unrelated technology catching the same market

Companies can use investment funds incorrectly due to negligence

Non-professional investors may not have networks to be in the know of the market they are investing in

Projects might not have the right team in place and it’s difficult to evaluate the quality of the team

Markets are volatile and investors are exposed to that volatility, especially in the early-stage investments

Some of the early-stage investment risks are: team risks, market risks, product risks

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