Startup company

lky2k23

Been offered some shares in a startup company from someone I trust and in a company I think will do very well but what are the key questions I should be looking to ask?

Can only think of when can i sell my shares at the moment and how much do you think they will be worth in x months.

thanks

Biggles

I'm afraid, with a startup company, those are the two questions that there is no point in asking.

The company won't be listed on the London Stock Exchange, so the notion of selling your shares and making a profit is a very long term thing. Most startups don't make their investors any money. Some make their investors a fortune, but only many years down the line.

To say you 'been offered some shares' makes it sound like he is doing you a favour. Try rewording it to 'I've been asked for a large sum of money' and see if you still feel so good about it.

If you have plenty of cash to spare that you (and your family) won't miss, and you particularly fancy the chances of this business, go ahead. If you aren't too flush with cash, don't even think about it.

jimjames

If they are not traded on any stock market then the value is purely what someone else will pay you and the chances are that there may not be any other buyer for those shares so the value cannot be determined.

King_Weasel

First question: "can I afford to lose this money?"

If yes, proceed to question 2...

Totton

I would only do the investment if I were prepared to write off the money completely and can take the view that the money is well spent any the outcome irrelevant. If you are at all worried that you may lose some or all of the money, then do not invest in it.

Being offered shares in a startup can be a great opportunity, for example you could make a huge profit or it could be a company doing something that you like and believe in. The investment can also be a real pain as it may bomb and leave you with nothing, and/or it may harm your friendship so much that you fall out with each other.

Don't let money ruin a good friendship, if it makes you feel good to help a friend then do the investment on that basis. If it makes you a fortune then that is a plus.

HTH,
Mickey