Experience over the years shows that while analyzing investment opportunities in biotech startups can be extremely complex, the basic rules of investing require little more than a discreet and prudent application of common sense.

Fortunately, we all have that (more or less) and it is easy to base a simple and effective investment strategy on some essential rules that we can all understand and that we try to explain here.

You are buying shares - actually, they are called participations, but for simplicity's sake we will continue to call them shares -of a company that is just starting to operate, and that in a short time can go from being worth very little to having a high market value.

At that point, those shares you bought for a few euros could be worth five, ten or a hundred times what you paid for them. On the other hand, if the company does not perform well, you may lose your entire investment.

It is important to stress this: the essence of investment crowdfunding is to give you the opportunity to make small, high-impact, high-return investments, accepting that some of them may not pay off.

Yes, investing in startups can be very profitable, and Biomedicine is one of the most profitable investment sectors in the world since 2008. Biotech investing offered an average return of 27% at the end of 2014, with a slight dip in 2016 that puts the average Biotech return over the last 10 years at a more than respectable 17.9% per annum.

But you will only get returns of this order if you invest rationally: some of the startups you invest in will multiply your money by 4, 7 or 25, while others will multiply it by 0. It is very important to understand that there are no high returns without high risks, in the same way that there are no low-risk investments that have high returns.

Despite the risk, entities such as mutual pension funds, government investors or traditional banks invest billions of euros in biotech startups every year. Why do these super-traditional, risk-averse investors invest in such volatile companies?

The answer is simple: the risk of investing in startups can be easily mitigated by applying common sense and diversification.

And then, the least basic:

Do not invest too much

The first rule is: don't invest too much money in startups.

One key to startup investing is that it is illiquid, meaning that once you have bought shares in a startup you cannot convert them back into liquid cash whenever you want.

Therefore, the risk you are taking if you invest too much money is not so much that you might lose it as the fact that you will not be able to get it back when you want it back; you will have made a long-term investment, so you should not invest money that you need to live on.

Typically, the money you don't need to live on is your Investable Capital, and could be defined as "that money that's sitting untouched in the bank for at least a year". Anyway, you should judge for yourself how much money you have available to invest and how much you need to keep to pay for food, rent, Netflix and baby's swimming lessons :)

All this investable capital should be distributed among different types of investments: stock market (high risk, but you can get your money back whenever you want), public debt (high security, low profitability, recoverable in the long term), investment banking (medium profitability, recoverable at any time)... and between 10% and 20% of your investable capital should be allocated to investment in startups.

Estimated return on a €3,000 investment:

It is important that this percentage is not 0%... although it is risky, investing in startups is profitable, and it is one of the best ways you have to support innovation and promote quality employment. And thanks to crowdfunding you can invest from very little money - why not invest 1000 or 6000 euros in companies that can return you thousands of euros if it goes well?

•  Try our calculator to find out how much you can earn depending on the financial products you invest in.

This is undoubtedly the most important rule.

The principle is simple: you are "betting" on companies that have a 10%-50% chance of making a profit, but if they do, they will multiply your money by 5, 10 or 20; therefore, and by pure logic, you should invest in more than one company.

If you spread your investment over at least 6-7 different companies you have a good chance of making a profit - you only need one of those companies to be profitable to have returns in the order of 5-10%, and if two of them are profitable you can have returns in the order of 15-20%.

There is no magic number for how many startups you should have in your portfolio... or rather, there are too many opinions! Our guidance would be that ideally 15-20 if you can afford it - and if not, at least 6 or 7.

We recommend that you make a table like this for your investments and assign a return of 0 to three out of 4 companies - you should still make money!

If you have money sitting in your bank account, remember to move your capital! Those euros that you have lying around in the bank are making you lose between 2% and 4% per year, like a balloon that is deflating.

10,000 euros that you do not touch becomes 9,500 euros in a year thanks to inflation, taxes and bank commissions. It is very important that, if you can spread your money in small investments, you do not stop investing in any project you are excited about. The possibility of having a huge return having backed a company you like is too interesting to let it slip away just like that.

Finally, don't forget why you are here. You didn't come to Capital Cell just because you want to make money, but because you want to change the world. Use your money, take the time and effort to decide what you want to do with it and become a responsible citizen with your capital. The next time the news informs you that the banking industry has generated some catastrophe... try that they could not have done it with your money :)