Investor engagement is paramount when buying into startups

"PRIVATE equity firms and investors are increasingly looking to take a chance on companies in the early stages of growth. Having said that, early-stage investments in startups have the potential for great rewards - typically five to 10 times more dollar value than a later-stage investment.

However, I would caution any investor to stay level-headed even in this exuberant environment, since such investments present unique challenges.

Identifying investee companies early on is the first hurdle. Investors have to look beyond profitability over the last few years; instead, non-financial and qualitative aspects take on greater importance in the investment decision making process.