For over 85 years, investing in U.S. startups has been nearly impossible for anyone except company insiders, institutional investors, and wealthy individuals. As a result, most people have no experience investing in startups. This is changing thanks to recent relaxations of financial laws.
Now that investing in startups is becoming increasingly accessible to the general public, it’s important for vegan investors to learn key fundamentals so they can enjoy the outsized profit (and risk!) potential, and have a greater say in which kind of companies get funded and build our future economy.
At Vegan Launch, our goal is to finance as many vegan startups as possible to help solve the many ethical, social, and environmental challenges that tie back to the lack of fundamental rights humans currently impose to animals.
One of the best ways to understand early stage investing it by looking at the qualities of different “asset classes”.
For example, most investors are familiar with investing in public stocks and bonds, and perhaps real estate. Each of these asset classes have basic their own distinct characteristics.
As an asset class, public stocks are characterized by relatively low risk of total loss (but it does happen!), and also relatively small typical annual percentage returns on invested capital (ROI).
In comparison, when viewed as an asset class, investments in startups are characterized by high likelihood of total loss, with occasional opportunities for exceptional financial gains over the course of five to ten years.
Given the high risk of loss associated with investing in startups, investors who wish to explore that class of investments should first calculate how much of their portfolio they could lose entirely without affecting their day to day lifestyle and long term goals.
Ideally, the investor would then divide this allocation of “risk tolerant” capital into five, ten or more smaller portions to help limit risk exposure in any one company, and instead create a diverse collection of early stage holdings.
As Vegan Launch membership grows, we anticipate driving the minimum cost to invest in any one vegan startups down to as little as $100. At that point, a person with even just $1000 to risk would be able to diversity into ten early stage vegan investment opportunities.