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One of the most frequent things our David Weisburd gets asked is about how to invest into startups at the earliest stage.
This is because early stage investing offers the highest potential return on capital of any stage of investing.
All things being equal, investing in a seed-stage company at a $5 million valuation can produce a return 20X larger than investing in the very same company once it's worth $100 million (Note: dilution can decrease the former return by 20-25%).
That being said, investing in startups at a very early stage has a very high level of difficulty.
So how do you go about picking the best early stage startups?
The short answer is that you can never know which early stage startup will bring you the highest return, but there are certain signals that can help you increase your chances of success.