I attended a business seminar where a facilitator a renowned professor, and Entrepreneur shared a story on how he missed out on investing in a small fintech start two years ago which as at today is worth $500 million. He said the team had approached him to make an a investment in the start but because he did not understand how the were going to make money since he didn't invest the $100k he wanted to write them. Today, he would have been $7.5million richer had he invested.
They say do not invest in what you do not understand which was largely the principle the speaker adhered to but what if despite not immediately understanding the business model and its profit making model yet your business instinct pushing you to invest. What should you do? Listen to the former or follow your instincts?
Investing in a start-up company, especially in fintech, is very similar to investing in a casino, especially if you do it without knowledge and just for a hunch. There are thousands of such companies every year that start, raise money from investors and end up going bust. It is similar to investing in shitcoins: I am sure that next cycle some shitcoin will make 1,000. The problem is to guess which one. You can lose a lot of money trying to guess, and in fact, you are most likely to lose it.