Four questions to ask to avoid getting burned by tech stocks

What can venture capitalists teach private investors about picking the best tech stocks? Matthew Partridge outlines four key questions to ask before you buy.

Venture capital (VC) now plays a huge role in the global economy, with around $150bn invested in companies in 2015. Nearly all of today's big-name tech firms relied on backing from VCs in their early stages. While few of us will ever have the chance to invest directly in a tech start-up, there are many small tech stocks on the London Stock Exchange and Aim. So what can venture capitalists teach private investors about picking the best prospects? Here are some key questions to ask before you buy.

How will the idea make money?

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri