Roi

[Jason G]

Hey everyone,

I'm looking for some advice. I've decided to become an investor in my step dad’s company. I think he has a wonderful business idea and from the analysis I’ve acquired in the past few weeks I truly think this company will take off.

I've never invested into a company before, so I don't know the legal aspects: however, I’ll be attending a meeting with a lawyer in the up coming weeks.

My question:

I live fours from where the company will be stationed, so I will not be performing any service for this company other than being an investor. Does anyone have advice on what I should look for in return of the company prospering?

Basically I would like to know how to setup ROI (Return on Investment)

[akula]

Ummm...Jason, your question (how to setup ROI?) is nonsensical. You can't "set up" rates of return because the ROI is a volatile variable subject to rules of randomness.

Accredited investors typically allocate 5-30% of their funds under management to private equity in an effort to optimise their overall portfolios (which include property and listed equity) for less unsystematic risk and more return.

The method used to select private equity investments is called due diligence. However, unless you are an accredited investor, private equity is not a kind of investment suitable to your circumstances. Specifically, you will not be able to absorb J-curve losses, because you don't have enough money.

Basically, if you don't know the answers to your question, then you shouldn't be investing in your step dad's startup. Likewise, assuming you are not an accredited investor, if you insist on investing in your step dad, your decision may prevent him from raising more money in the future (which he'll have to do if the startup takes off). No one wants to co-invest with inappropriate co-investors.

That said, if you do want to find out how to successfully invest in startup companies, you might want to consider venture capital as a career opportunity.

At any rate...if you choose to ignore these warnings, Google "due diligence" and see how you go.