Sergey Kartashov expresses his views on making ultimate IT startup investments

Sergey Kartashov, the CEO of Generation Partners, a Cyprus-based asset management company, shared his views about how to make the right IT startup investments. Most of the investors get lost in the ocean of IT investments due to their own mistakes. The IT investments are growing rapidly with the growth of startups appearing on the market. The information technology market has been growing rapidly at a continuous pace. It has an excellent feature of getting huge returns on smaller investments.

Sergey Kartashov, the CEO of Generation Partners, a Cyprus-based asset management company, shared his views about how to make the right IT startup investments. Most of the investors get lost in the ocean of IT investments due to their own mistakes. The IT investments are growing rapidly with the growth of startups appearing on the market. The information technology market has been growing rapidly at a continuous pace. It has an excellent feature of getting huge returns on smaller investments.

There are hundreds of examples in this regard when a smaller investment yielded a huge profit over time. Rovio got a profit of 57 million euros for its investment of 100,000 euros in Angry Birds. Mike Markkula increased his assets 2000 times within a few years for his investment of $92,000 in Apple. Sergey Kartashov shared his views about how to invest in IT startups on the base of his experience.

According to the CEO of Generation Partners, there are only a few startups that generate continuous profit for the investors. The recent stats suggest that only 15% of the IT startups produce a meaningful return on investment. Investors should analyze a huge number of proposals on the base of criteria to predict the future of an enterprise with a higher probability of success. It is a real art to determine the future of a company at an early stage. Investors should look for innovative products to invest in. “The product itself, which the developers offer, should be innovative, undoubtedly useful, and should solve a specific problem in a narrow area,” noted Sergey Kartashov (Sergejs Kartasovs).

The usefulness and innovation of a product reduce competition and increase its price. IT startups require a huge amount of money to convert their ideas into reality. They have to spend money on the development of the workspace and paying the salary to the developers. Unfortunately, only a few startups achieve success in terms of showing a huge return on investment. Here comes the diversification of the portfolio into play for the investors. Sergey Kartashov explained, “When it comes to financing startups that do not have yet a finished product or a working business model, but only a rough business plan, it is worth resorting to diversification.” Most of the startups remain at a higher probability of failing to reach their goal. Some startups have the potential to generate a handsome profit. The diversification of portfolio allows an investor to enhance the probability of success and reduce the risk.

If you are planning to invest more than $100000 in a startup, then you need to consider only finished products with a lower risk factor. An investor can enhance his prediction skills by gaining as much knowledge about a company as possible. Leadership plays a crucial role in the success of an enterprise. The CEO of Generation Partners advised the investors to assess the abilities of the leadership of a company before investing in it. They should use different evaluation criteria to analyze the risk involved in an investment. “A comprehensive analysis of the strengths and weaknesses of a startup allows us to predict with fairly high accuracy,” he noted.

Angel investment is another important scenario in the field of IT startup investments. For example, Peter Thiel invested $500,000 in Facebook in 2004. After seven years, he had assets of more than $1.5 billion. Similarly, a Stanford University professor, David Cheriton, became a billionaire through his investment of $0.1 million in Google. There are many startups that became large global enterprises after a few years.