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?
In case you don't understand something, listening to our instincts is a good alternative and we don't have many other options. The best solution would be of course to study and understand their business concept, but this could take time and some companies are looking for shortterm financing. 100k USD is a huge sum of money at least for me and I would probably not invest it only on my instincts. There are so many startups out there that are looking for seed capital and especially in the tech sector it will be hard to understand all the new ideas they are trying to sell. We shouldn't feel bad about missed out opportunities, because there will always be another chance to make money. Also looking back at one successful business that became a multi-million-dollar investment lets us forget about all the other companies that failed in the meantime. Looking backward in time at one successful event is not very helpful, it’s like saying why didn't I pick the right lottery numbers last week.