Investing in a private company at the earliest stages of its development (a.k.a. the seed, or angel stage) can be exciting, but also very risky. In this mission, we’ll introduce you to a few different models of investing in startups.

It’s easy to be seduced by the potential of a colossal return on your investment (Company X could be the next Instagram!), but seed-stage investing requires a lot more time and effort on your part than just signing a check. If you’re smart about it, you will participate in the company. This could be something as simple as spreading the word on social media, or as consuming as sitting on a board of advisors.

Another thing you need to have is patience. You may wait a very long time – several years even – until you see a return on your original investment. A big return comes from a major event like an IPO (Initial Public Offering, when the company goes public and you can freely sell your shares as stocks), or a merger or acquisition, where another, bigger company joins or buys your company.

Still, the stakes are high: 55% of startups fail in their first five years of business, and until Company X goes public (assuming it makes it that far), your shares are extremely difficult to sell.

The safest way to invest in startups is to fund people you trust, who will deliver products or services you believe in. You can’t put your money down with the singular hope of turning a profit, because that may never happen. You must want the business to succeed for what it will bring into the world, not just into your wallet.