| ou are looking into ways of making money on the | | | | But isn't there a significant amount of risk involved in |
| Internet? - Aren't we all, and it seems very hard to | | | | early investments in companies? Sure, risk is much |
| find the winning strategy. I have a recipe for you, | | | | higher than if you left the money on the bank, or on |
| Everyone trying to make money online is trying to | | | | the stock exchange. But you are looking into a way |
| make something, with nothing. This will never work | | | | of making money, and to be able to make money |
| for obvious reasons if you can look at things | | | | you have to risk certain money to be able to |
| objectively. You have to have something to be able | | | | succeed. Risk is somewhat similar to any business; will |
| to make something. Simple as that. If you invented | | | | they make it? Will the product sell? Will it boom? |
| the Ipod, great, you are a millionaire 100 times over | | | | What happens if it just sells and not booms? |
| (they just sold their 100 millionth copy). | | | | The ground rule is, how many ways is it possible for |
| If Ipod was created by a new company as their first | | | | me to make money in this particular investment? Is it |
| product, who would make the most money on the | | | | all depending on one thing or do they have multiple |
| short term scale (less than 12 months)? | | | | income streams? |
| The venture capital companies or business angels | | | | What about track record? They have none, the |
| that put up the core investment in the company to | | | | company is new, remember. It is all down to the |
| realize the product. Every company with a strong | | | | product and its market. Why is everyone talking |
| product must capitalize their company to get the first | | | | about track record anyway? It is of course risk |
| product on the market, and the VC companies | | | | reducing to get in at a later stage, but reward ratio is |
| makes a ridicules amount of money on seed funding | | | | then lower. I like the risk, makes it fun, and sure, I |
| and startups because they are the source of funds | | | | would not bet my house, only small money, less then |
| for the entrepreneurs with the product, the next | | | | $10 000 for me. If you cant afford to loose the |
| cool product. The next 100 million dollar product. | | | | investment, do not do it. |
| So, am I saying that you have to figure out the next | | | | Think of the product, is the product a good idea? is |
| super cool product or service? No. I am saying you | | | | the market good? If so, then it is just a matter of |
| should try to get in on the VC level with your | | | | your own financial capacity. You have to have SOME |
| investments, since they have the largest leverage on | | | | money in order to make an investment. A few |
| the capital. If you buy a stock today, for $10 a | | | | thousand dollars should do it. And yes, if you only |
| share, and if it went up to $12, it would be great, but | | | | make one investment the first time, you have an |
| what if you bought the same stock for 30 cents and | | | | exciting period ahead, when the progress reports are |
| sold it for $12? | | | | coming in, since you are a shareholder you will get |
| Well, it is not easy to be a VC, since it requires | | | | information updates regular. |
| access to a lot of money, money we first must earn. | | | | If it pays off good, if you can sell the shares for |
| But what if you got a chance to add a small | | | | $3-5 each and bought them for less than 50 cents, |
| investment to a pool that would do seed and startup | | | | please save at least 50 % of the profit before |
| funding, and take the gigantic percentage increase | | | | entering new deals. This is how you get rich over |
| from the stock on your money directly? | | | | time. There is no getting rich quick thing, it all takes a |
| Let's assume there is a company trying to get a | | | | lot of time and a lot of sense. Do the math and do |
| funding of $3 000 000 for getting the product out | | | | not get in heavy (with all your got), save the profit |
| there, and selling 49% of the company's equity for | | | | and get a less risky investment with some of the |
| 30 cents a share, would you take the risk of a 3000 | | | | profit and let some of the profit go to new equity |
| dollar investment to own shares in that company if | | | | deals in new companies with exciting products, on |
| the product and idea is good? | | | | the right market. |
| I would. And I did. On one particular investment I | | | | I cannot recommend anything to you, but I can tell |
| went from an investment of $4000 and made the | | | | you the truth, it is impossible to make something out |
| exit at the IPO (when everyone else was getting in) | | | | of nothing. And when it pays off, it is fun, you feel |
| I sold my shares for $2,5 each, and I bought them | | | | very light, very energetic and the sunshine around |
| for 10 cents. Please count the percentage on that. | | | | you makes your day beautiful. |
| Yes, it is astronomical. | | | | If it doesn't pay off as planned, well you tried, and |
| But how did I dare risk $4000 for a product that | | | | you do have the shares, most companies will come |
| was only on the drawing table? It was easy for me, | | | | around so at least you get something back. And |
| knowing the power of Internet and the marketing | | | | there are always new deals to consider. Do you |
| waves on the Internet, I saw an opportunity that | | | | remember the sum Mr Donald Trump was owning 99 |
| was so good it had problems to fail. Well, you see, if | | | | banks when he crashed? It was billions of dollars. |
| the product is good, it will sell, and by understanding | | | | Where is he now? Oh yeah, he has a few billions in |
| the product everyone that can think for a minute | | | | net worth again, and boy that man is a genius, or is |
| can take the right decision. Risk is higher but the | | | | he? What did he do? He took risks, thats all what it |
| reward ratio is much higher if it works. | | | | comes down to, take the right amount of risks and |
| Did you know that over 30 different VC companies | | | | capital at stake, to do the deals that pays off the |
| turned Skype down, they didn't believe in the | | | | highest. |
| product. Skype had a very tough time getting the | | | | There is no secret here, it is common sense, risk and |
| funds to develop the first versions. Skype was sold | | | | some money at hand. |
| to Ebay for an astonishing $5 BILLION. What do you | | | | Are you up for it? |
| think the down turning VC's said afterwards? | | | | There is even an opportunity for you to get shares, |
| Skype is a hype, it will blow over. It is crazy how | | | | no money down, shares for free. Does that sound |
| much power the VC's do have since they are | | | | interesting? But you have instead of money down, |
| controlling the funds, and they do know each other | | | | work to do as a reseller instead. Your time for free |
| so they talk to each other. The VC behind the Skype | | | | shares. |
| funding, paid about $1M for 30 % of the Skype Corp, | | | | Astonishing. |
| and guess if they where happy when Ebay bought it. | | | | |