Long long ago I invested a small amount in a start up. Yes, I lost the money. Completely my mistake. The competence of the person doing the business was always in question, but I just invested based on ‘friendship’. Lost todays equivalent of  1 million rupees, but I would call it the price of learning.

Last week one person asked me “should I invest in a friend’s startup”. He added that the company was expected to be listed soon (3 years), and it is in the IT space. I did not have a view – so I asked him the following questions…well..

Me: Do you understand what business the company is doing?

C: No. It is some accounting stuff for individuals, companies, etc…

Me: so does the individual have to pay to buy this or gets it free?

C: Not sure Subra, but I think it is free and the owner of the software makes money by selling adds – which will pop up when you use the same.

Me: does he have adequate funding?

C: No idea

Me: Why do you want to invest? are you expecting great returns or are you trying to help a friend?

C: Not really sure. His father helped me when I wanted to buy a house. Of course I have returned the money long ago…but the gratitude stays..

Me: Do you think he is paying salaries on time?

C: No idea Subra.

Me: Will you take the trouble to find out how he treats his vendors, employees, clients…

C: No Subra, too much trouble.

Me: so you want to invest in a company which MAY be having a cash crunch, does not pay the statutory dues on time, has a product/ service which is uncertain,….and all this when you do not have US 1 Million in your Retirement kitty.

Me: If you still do not have an answer…I think you have come to the wrong person. You need to meet …….. from Dehradun….who will give you a far, far more befitting reply, and perhaps colorful too.

By the way I know from where this ‘interest’ in investing came up for you. Your bro invested in a start up and in that he made 2 Million US $ profit on an investment of US $ 10,000.

However you also need to remember that your brother invested in a company in India – and he has lost about Rs. 2 crores – this shit is listed but he cannot sell…even if he wants to!!