How do I invest in venture capital?

1. Think about how much you want to invest. You need to start here or else you might get sucked into something that puts you underwater in a hurry. Just like deciding how much car or house you can afford before talking to a dealer or realtor, don't get into business investing without first figuring out what you're willing to offer as a financier. You can decide on a smaller amount that lets you spread your wealth between different companies, or the largest percentage of your liquid capital that can go to one startup. With no shortage of business owners looking for financial backing, establishing a price before you start searching will help you narrow the field.

2. Think about the means. You have plenty of options for how you get your money to a business owner in need. I handle this service on behalf of my clients, as do many wealth managers. You can go directly to an entrepreneur and draw up your own contract if you feel comfortable doing it that way. If you want to have a lot of safety mechanisms in place, try LendingClub or one of the other P2P sites that allows you to join forces with other venture capitalists to fund small businesses. You'll learn a lot during your first trial with business funding, so focus on safety and security at the outset. If you're comfortable, you may increase your risk and revenue as you become more comfortable with the process.

3. Think of who you want to back. What kind of businesses and business owners are you interested in? The whole process is much more rewarding when you care about where your money is going. Depending on what your company did, you may be able to offer expertise in addition to funding for a small business owner in need. When you pick the right venture, business investing is a lot of fun. .