A startup is an early-stage company looking for a scalable business model. Investing in a startup means buying a stake before it goes public, in exchange for money the company uses to grow. If the company succeeds, your stake is worth much more. If it fails — the most likely statistical outcome — you lose everything you put in.
It is not like buying shares on the stock market. There is no price on a screen. You cannot sell tomorrow. It is a long-term bet on something that does not yet fully exist.
In 2008, investing $11,000 in Airbnb (when it was just an idea about renting out air mattresses) would have been worth hundreds of millions at its IPO in 2020. But for every Airbnb there are thousands of startups that disappear without a trace. The statistics are brutal: 90% fail.