I recently invested a five digit sum and it turned out to be one of the worst deals I ever made. I'm not a classical investor or VC and currently I don't have a lot of money to invest, but I really want to learn how investors/VCs think and act. This would help to avoid investing hard-earned money in junk projects and also to learn how great business opportunities can be identified, whether that is in the startup scene or in other avenues. I want to learn the metrics of investing into businesses and how to separate "wheat from chaff". I realize this platform is more for helping entrepreneurs, but apparently there are some people in here who are both, i.e. entrepreneurs and investors. So what is the best way to learn the art of investing in businesses? How do you become an investor? How do investors spot and analyze business opportunities? Any tips? Any books or websites out there?
You learned a very good lesson from getting burned. You learned what a bad business investment looks like. Go over why your first investment failed to learn what signs to look for when investing in the future.
You have to fine tune your b.s. meter. Unfortunately , this usually involves being burned at LEAST once.
Investing is gambling- do not invest more than you can afford to lose. It may be the next big thing or it may be a flop. Even if it is the next big thing, it could wind up a flop if people are idea plentiful but fiscally foolish.
Don't get emotionally invested in the project. Ask for a business plan. Does the person whose thing you are investing in have skin in the game, have they invested any of their own money in the project? Are they talking to other investors besides you?
Talk to outside people about the project ( don't get specific , but enough general details) to see how the purchasing public reacts- does it hold their interest or are they saying "meh...".
To be a successful investor you must be willing and able to assume and absorb financial risk. You have to have enough of an ear for what people really need/want that your gut says "yeah, this WOULD be a good investment" or "meh, not worth it".
Don't be demoralized by the first failure. Everything is a learning curve and now, in your brain are certain alarms that will sound if they happen again. Good luck !