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Basics of Investing in Startups

Before you get started investing in early-stage companies, it’s important to understand that many startups fail and leave investors with nothing. It is a high-risk, high-reward kind of endeavor.

Sometimes, startups allow you to get your money back if a company is not successful in raising sufficient funds, and if they guaranteed the return of your money.

It’s worth noting that startup investments are generally not tradeable like stocks. You should expect to hold onto your investment until the company goes public or is acquired.

While relaxed regulations have allowed for more individual investors to get a financial share of startups, there are some rules to follow. Due to the risks involved, the Securities and Exchange Commission (SEC) limits how much you can invest in any 12-month period. This limit could be as low as $2,200 or as high as $107,000 depending on your income and net worth.3

The platforms listed below offer a sampling of the avenues available to anyone who wants to invest in a startup with limited funds. While it’s unlikely that you’ll become the next Silicon Valley billionaire, these platforms can help diversify your broader investment portfolio and give you the satisfaction of supporting a young company you believe in.

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