What return on investment can I expect?
Investing in start-ups entails serious risk. Indeed, statistics typically show that 30 to 40% of start-ups fail, 40 to 50% survive but do not bring much return on investment, while the rest (10 to 20%) succeed with a financial gain, meaning there is a return on investment, as the company gets acquired or goes public on the stock market. That’s why it is crucial to diversify, in order to mitigate the risk. In this case only, the gains of the 10-20% of start-ups that succeed may counterbalance losses and provide you with a decent return on the totality of your portfolio.
When investing in start-ups you should always take into account that most of them will not succeed. This is a reality of the market. By investing in a portfolio of start-ups you diversify your risk and increase your chances of investing in a successful one. This is why it is highly recommended to diversify your investments.