Sergey Kartashov: Invest in low-risk, high-profit IT projects

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Sergey Kartashov, the CEO of Generation Partners, a Cyprus-based asset management company, expressed his views on how to invest in IT startups by keeping risk and reward in mind. Many investors get lost in the ocean of new IT projects due to some reasons. The intensity of IT investment is rising with the increase of new projects appearing on the market. It makes it hard for investors to choose potential projects with a chance of high reward for a smaller investment.

Sergey Kartashov, the CEO of Generation Partners, a Cyprus-based asset management company, expressed his views on how to invest in IT startups by keeping risk and reward in mind. Many investors get lost in the ocean of new IT projects due to some reasons. The intensity of IT investment is rising with the increase of new projects appearing on the market. It makes it hard for investors to choose potential projects with a chance of high reward for a smaller investment.

The IT market is suitable for “business angels”. The angel investment is known as an investment that gives a high return on a lower investment. For example, Peter Thiel, an American entrepreneur, invested $500,000 in Facebook back in 2004. His return on investment already reached $1.5 billion in 2011. He also became a member of the board of directors of the company. It gave him a chance to take the development decision of one of the most used social media platforms. David Cheriton, a Stanford University professor, invested $100,000 in Google in 1998. After a few years, he became a billionaire as a result of the return on his investment. He had never thought of getting such a huge price for his investment at that time. There are hundreds of such stories in the field of IT. Now, investors use modern tools to analyze the startups to predict their future worth. The analysts help the investors to find new Facebook, Google, and Apple of the current era.

The ways to reduce risk while investing in a startup
Sergey Kartashov gave important tips to reduce risk while investing an amount of more than $100,000 in an IT project. “You should use various formulas and tools to evaluate the future of an It startup,” said Generation Partners CEO. The skills of the leadership of the startup are very important for making it a successful project. So, you should evaluate and assess the skills of the leaders leading the production and management of a new project. Moreover, investors should analyze the business plan, product development, and qualities of the leaders. They should invest a huge amount in a startup only if the leadership has the potential to overcome all hardships coming in the way of success. Sergey Kartashov said, “A comprehensive analysis of the startup’s strengths and weaknesses allows us to predict with fairly high accuracy how it will develop in the future.” The combined analysis of the above-mentioned factors gives the investors an idea about the future of a new project.

Diversification of investment portfolio
For more than $100,000 investments, the investors should go for already finished projects that have more chances of getting success in the near future. Sergey Kartashov noted, “When it comes to financing startups that do not have yet a finished product or a working business model, it is worth resorting to diversification.” Many business ideas just remain a beautiful idea as only 15% of the startups give a viable return to the investors. Among these 15% potential projects, only a few projects generate consistent profits for the investors. The CEO of Generation Partners elaborated on the importance of diversity as, “The profit from the productive projects is so large that the sum of all deposits pays off due to the received dividends.” Moreover, he advised the investors to analyze the host country of the company, profit in the previous year, other investors of the company, and the amount invested by them, and many other such factors. These analyses will reduce the risk and increase the chances of success.