How to Invest Efficiently

There are many ways to double money and in modern times, investment is the most effective way that many people look for. Yes, investment is necessary. But there are still many who don’t know how to do it. So here is how to make an investment that you can do:

• Has a Purpose

Why are the objectives in investing so important? This is because if you do not have clear goals, it will be difficult to determine what steps should be taken next. The goal will affect what kind of investment you should take, starting in terms of timeframe, type, and where you want to place the investment.

• Think about Risks

High profits are also high risk and low risk, also low profits. That is the principle of investment. So, if you offer investment or anything with exorbitant profits and say that the risk is low, you must be suspicious or even have to waste time listening to it. Because it means going against the facts and facts in the financial world that have been more than 100 years.

From here you can already understand that when investing with high returns it must be prepared with high risk. So hunting for investments with the highest returns is not always the best, because it is very possible that you are not prepared for the risks.

Investment is one of the important variables in an economy. The determinants of investment are very dependent on the future situation so it is difficult to predict. Therefore, investment is easy to change according to the current economic climate. Then what are the factors that influence investment so it’s easy to change? The following are some of the factors that affect investment, namely:

• Availability of Production Factors

The large amount of available capital goods causes corporate households to delay their investment. The company will maximize the use of production factors such as capital in the form of production machines. This is done so that capital expenditure investments become more efficient.

• Quality of Human Resources

Qualified people these days are an important investment attraction. The reason is that the technology used by entrepreneurs is increasingly modern. Modern technology requires more skills from the workforce.

• Influence of Infrastructure

The state of infrastructure can invite investors to invest their capital. Many countries invite investors to invest their capital in the infrastructure and infrastructure sector. Both in the field of transportation such as, roads, ports, terminals, airports and so on.

• Technology changes

Advances in technology encourage companies to use more modern technology. The company invests part of its revenue in technology that can provide a large profit for the company.… Read More

Determine the valuation or nominal funding first?

According to some experts, a startup founder is better focused on what is best for his business today, and starts from calculating how much funding he needs to get. Startup valuation should only be considered as a result of the nominal calculation of the required funding.

Here are some things you should consider in determining the target funding nominal:

• Estimating the time that must pass until a startup can get the next funding. For early stage startups, it usually ranges from 12-18 months.

• In that time span, you must be able to develop a number of important metrics (key metrics), such as the number of users and repeat transactions (repeat transactions).

• Calculates how much money will be spent in that time period. A startup will usually spend large funds in investing in employees and technology.

• Adjust so that the valuation value generated will not differ greatly from the valuation of other startups in Indonesia.

How to calculate Pre-Money valuations for early stage startups

To determine the Pre-Money valuation, there are actually two types of calculations, namely:

• Use methodologies, such as Discounted Cash Flow, Comparable, and Berkus, which will be explained below.

• Without methodology, or commonly referred to as Pricing. Founders only need to calculate the amount of funding they need and the shares they are willing to give, then negotiate with the investor.

In fact, for startups, most founders and investors in Indonesia more often use this Pricing technique to determine startup valuations.

This happened because a venture capital company (VC), which used to provide funding to startups, was eyeing profits from the resale of shares they owned. Therefore, they tend to estimate the right selling price for the startup in the future, when they want to provide funding.

This is different from conventional investors who usually provide funding to companies to benefit from profit sharing (dividends).

“Determining valuations for startups is more like art than science,” an investor from a venture capital company told Tech in Asia Indonesia. To provide a reference in determining reasonable prices, VCs will usually use existing valuation methods.

Differences in calculation of startup valuations in various phases

1. Initial Phase

• At this stage you can get seed funding from an incubator, angel investor, or venture capital company

• The majority of homeland VCs will usually use the Comparable, Multiple method, or determine valuation based on the startup development phase at this stage. Some of them use more than one method, then look for the average valuation resulting from these methods.

• Team quality is important at this stage. Therefore, founders who already have good backgrounds and experience have the potential to obtain greater funding and valuations.

• At this stage, startups will usually give about 10-15 percent of shares to investors. But there are also startups that after negotiations can only give 5-10 percent of shares, or even give shares above 15 percent.

• Some VCs also tend to choose convertible note options at this stage. Convertible … Read More