Investing in a start-up for Multibagger Returns? Is it worth the Gamble?

The entrepreneurial wave in India is at its peak. Technology and young, ambitious founders have given rise to a plethora of new start-ups. Funding, which was the biggest bottleneck for business ideas in no longer an issue, venture capitalists and angel investors are ready to take a punt on the next big idea.

We’ve all heard the success stories — early investors making 20x to 50x returns in just a few years. This is inspiring HNIs and even professionals to dabble their feet in early stage investing with small amounts that could turn into their retirement corpus.

But before you jump in, let’s take a step back and understand how this game actually works.

How a Venture Capitalist Operates

1. Portfolio Approach: A professional angel investor doesn’t bet on just one start-up. They typically invest in 10 or more ventures, fully aware that most will fail. Just one or two big successes can make their overall portfolio profitable.

2. Due Diligence Expertise: They’re skilled at evaluating founders, markets, and business models — something an average investor rarely has the time or access to do well.

3. Liquidity Options: Even if things go south, institutional investors can often sell or exit at a loss. A retail investor, however, might be stuck indefinitely, unable to recover even a fraction of their investment.

4. Bringing new investors: Most startups need continuous funding since they are at a loss. Angel investors and venture capitalists an bring in more investors to fund further plans. As a retail investor you would not be able to do this.

The Reality for a Common Investor

If you make one or two such investments hoping for a windfall, the odds are heavily stacked against you. Even if the start-up looks promising, the truth is — most early-stage companies don’t survive long enough to make returns.

Beyond the financial risk, there’s the emotional stress of dealing with uncertainty, founders’ promises, and the possibility of losing your capital entirely.

I’ve seen investors put ₹10–20 lakhs into ventures they thought were very promising with a unique business model, only to see them go to zero. Years later, they regret not investing that same amount in mutual funds — which could have grown 3x–4x in a decade and easily funded a child’s education or marriage.

The Bottom Line

Investing in start-ups with limited experience is not investing — it’s speculation. Stay away from this space unless:

• You’ve already secured your other financial goals, and

• You’re completely comfortable seeing this money go to zero.