If you ask Google “how to invest 40k wisely”, you will probably learn that according to Investopedia, the major market sectors of 2022 are “oil, gold, autos, services, and housing”. Exactly what people were investing in a hundred years ago. Although researching options and business insights is vital, money investment tips often become harmful. While you still can get sound advice on how to invest in stocks, finding a niche for your own business idea is much more sophisticated.
The Rocketech analysts explain why there is no definite answer to the question “What should you invest in right now?” and what you really should consider if you have a business idea and capital.
The Game of Low Probabilities
Most people are used to the idea that the norm is when everything works out and every initiative is successful. In reality, it’s not true. In fact, any confidence in success is an illusion. The point of the game of low probabilities is accepting that the norm is when something does not work out. If you take this game, it gives you less anxiety about failures (they are the norm) and more joy over victories.
Serial entrepreneurs with years of experience and many successful projects regularly launch new projects that fail. And they are relaxed about it because they know nothing guarantees success.
Most people avoid playing this game. It’s common to seek confidence in a positive outcome before acting. So, they prefer to do nothing, thinking it minimises the risks and saves them from uncertainty. But the fear of failure is often fictitious. It’s just a prediction of the future that we’re making relevant for ourselves.
Long-term planning creates only uncertainty that inhibits everything. Instead of starting the project, we prefer to keep training. And the constant desire to increase the chances results in an endless craving for new knowledge for better preparation before action. But it is impossible to prepare oneself for all possible situations.
Certainly, planning and analysis are essential. But a “best place to invest money right now” is rather a mythical concept that has little to do with reality and its numerous internal and external factors.
The game of low probabilities is based on a philosophy of action and proactivity. In business environments, it’s associated with a large number of attempts, the trial-and-error process, and inevitable fails. All that creates experience essential for success.
What Can Startups Learn from Venture Capitalists?
Short answer: a lot. Venture capital is one of the riskiest and potentially most profitable types of investment. And any investment starts with a search. In fact, nobody knows where the profits will be. The first step is continuous testing—any idea or hypothesis. That’s why venture capital investors invest in multiply projects: roughly speaking, only one out of ten will work out. It is the game of low probabilities.
Many startups attract first investments and prefer to stop to avoid further mistakes and, as a result, failure. But not moving further is the biggest mistake you can make. Any idea develops naturally. In terms of entrepreneurship, it means building professional in-house teams and scaling up by looking for ways to expand your business, whether going to new markets or introducing new features or services.
Clearly, monitoring the market situation and analysing what venture capitalists invest in are strategically important when choosing your niche. It does help founders and product owners make more accurate predictions and create higher-chances business models. Here are the latest insights from the leaders in analytics and consulting.
The Future According to Andreessen Horowitz, CB Insights
Industry-specific investment trends
- Media & entertainment
Cross-industry investment trends
|Blockchain & crypto |
|The metaverse |
Decentralised social media and publishing networks
Virtual economies for game development
Digital asset marketplaces
E-commerce enablement for NFT storefronts
Crunchbase: Industries with Fastest-Growing Series B Funding
Total US Series B investment in 2021, by sector:
- Healthcare, $17.5B
- Financial services, $6.6B
- Shopping and e-commerce, $17.53.7B
- Transportation, $2.7B
- Real estate, $2.2B
- Security, $2.1B
McKinsey Global Private Markets Review 2022
- Global real estate deal volume in 2021: $1.3 trillion.
- Insight: Urban cores keep attracting highly educated talent and the largest and most innovative employers.
Infrastructure and natural resources
- Infrastructure and NR’s global AUM in 2021: $1.1 trillion.
- Insight: Besides bridges and roads, the focus is on operating companies and early-stage technology ventures.
Environmental, social and corporate governance
- The average fund size of firms with explicit ESG policies is $1.1 billion, compared to $0.3 billion for those without such policies.
- Insight: Focus on green technologies, regulations and market demand.
Such comprehensive statistical market analysis helps new entrepreneurs and fresh startups find a direction and start searching. It doesn’t, however, guarantee that your idea will skyrocket, and your venture will become the next Amazon. After all, it’s impossible to predict everything and consider all risks. The COVID-19 pandemic and recent dramatic Bitcoin price drop are perfect examples.
Balancing the Investment and Operational Approaches
Although the very idea of launching a startup may seem exciting, sooner or later, the creativity of saving-the-world ideas meets the reality of managing your business. In the end, it’s about the numbers, figures, performance and industry benchmarks. It is when you should realise the value of investing in your team and operational model as one of the safe investment options.
Every business is unique, even if you try to copy your successful competitors. There is, however, something shared between startups in general. If you’re lucky to find your product/market fit, your startup will grow rapidly towards a scale-up. It’s when it’s no longer a few like-minded people who do everything. It’s the time to establish and streamline the operations that include:
- HR operations (including on- and off-boarding);
- Financial planning and management;
- Employee training;
Investment acquires new meaning here. It’s balancing between the two approaches—investment per se and operational. The former means testing market hypotheses and looking for the business model that eventually will start making revenues. The latter implies investing in your own company, whether building a strong team you can grow together with or automating all internal processes to create a solid basis for future scaling.
There are different ways of investing money. Some people open savings accounts, some buy cryptocurrency, while others become entrepreneurs. And the inevitable part of entrepreneurship is uncertainty.
You can only gain a lot of experience by making a lot of attempts. We often do it just once and twice and hurry up to draw conclusions. Meanwhile, success is behind continuous testing and trying all over again.
And most importantly, it applies not only to launching a new project but also to scaling an existing business. Once you reach one milestone, you need to get back to the investment approach looking for options to expand. Because every idea eventually evolves.