Return and risk from investments in startups
Startup investments are venture capital investments. Investments in startups aim for very high returns. The aim of every investment is to multiply the investment amount, i.e. to achieve a return of several hundred percent. At the same time, there is a high risk of total loss for every investment.
The return is achieved by holding a stake in a startup, such as a share or a GmbH share or a security paper. This share is then sold at a multiple price when the startup is sold or the startup goes public.
Successful investors spread their investments over as many startups as possible. Through diversification you can minimize your risk and unsuccessful investments can be compensated by high returns of the successful ones.
In order to be able to better assess an investment and to make your selection easier, we show important key figures for each investment:
Targeted return
The target return shows you which return our experts are aiming for with this investment.
You see the desired return both as total return and converted to a value per year.
Please note that this is the target pre-tax return, i.e. the return we intend to achieve with the investment. It is not guaranteed, but can also be lower and there can still be a total failure.
Targeted time to exit
This is the period in which our experts aim to sell the startup (exit).
This period is important because when you sell the startup, your return is achieved. The above mentioned "target return" refers to the return at that point in time.
This period is not guaranteed, but can be shorter or longer.
Companisto class
Furthermore, we classify every investment opportunity according to its Companisto class. The Companisto class is a standardized process developed by us, with which we offer investors the opportunity to assess investments at a glance and to compare them with each other.
The Companisto class measures the relative risk based on important criteria that are of great importance when making an investment decision in the venture capital area. Companisto Class A is the class with the lowest risk and Companisto Class E is the class with the highest risk.
A higher risk does not necessarily mean that the investment is less attractive. It just means that the probability of a total failure is higher. Usually, however, a higher risk is accompanied by a higher profit opportunity. Basically, the higher the risk, the higher the potential returns.
As an investor, you can decide for yourself which opportunities / risks you want to take.
|
Criteria |
Weighting |
Test criteria |
|
Liquidity |
2 |
free funds, burn-rate, reach, other financing sources |
|
Profitability |
2 |
current status, projection |
|
Revenue |
2 |
current status, projection, growth |
|
Management |
1 |
qualification, completeness, complementarity, company share of the management |
|
Intellectual Property (IP) |
1 |
patent situation, competitive edge |
|
Customers |
1 |
quantity, structure |
|
Shareholder |
1 |
cap table, capacity for follow-up financing |
A higher risk does not necessarily mean that the investment is less attractive. It just means that the probability of a total loss is higher. However, a higher risk usually goes hand in hand with a higher chance of profit. In principle, the higher the risk, the higher the possible returns.
As an investor, you can decide for yourself what risk/reward ratio you want to take.
