Top Investment Opportunities In Startup Related Stocks: Legal Zoom, UpWork, Godaddy

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Top Investment Opportunities In Startup Related Stocks: Legal Zoom, UpWork, Godaddy
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The United States sees hundreds of thousands of startups on a yearly basis and has been home to some of the most successful startups globally, such as SpaceX, Instagram and Airbnb. It continues to be an area of the US economy with high activity and the US has some of the highest valued startups worldwide. In the last financial quarter alone, there were over 284 000 startups in the US. 15.4% of the US population is involved in startups.

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Many of these startups are in the tech industry, which makes up 10.5% of the US’s entire GDP. Often these startups are funded by venture capitalists. As of August 2021, the value of venture capital backed IPOs was $30.4 billion. Generally the tech industry attracts the most venture capital investment.

Investing in startup stocks therefore has the potential to provide a very high return on investment. Luckily it is not only venture capitalists that can invest in startups. Individual investors can invest as angel investors if they have the funds to do so, or in a collaborative way through crowdfunding on a crowdfunding platform. Investing in startup related stocks also has the potential to be very lucrative. For example, certain companies may not themselves be startups but are in the business of assisting startups get off the ground. Some of these types of businesses include LegalZoom, Upwork and GoDaddy.

LegalZoom

LegalZoom’s market capitalization as at close of business on October 19, 2021, was $5.11 billion. As an online legal technology company, LegalZoom has assisted multiple clients with various legal documents without the expense of having to hire an attorney. Their success in providing affordable legal solutions has been commended by the American Bar Association. In addition to its legal services, LegalZoom also offers LLC formation services, registered agent services, and many others. This impressive repertoire may be why LegalZoom’s stock price has been on an upward trajectory.

Investors should also consider investing in alternative options to LegalZoom operating in the same space, such as ZenBusiness, IncFile, Northwest Registered Agent and CorpNet. Each of these have their own selling points which increase their popularity and thereby the value of their stocks.

Alternatives to LegalZoom

ZenBusiness

ZenBusiness offers LLC incorporation services for $39 (not including state fees). While only incorporated in 2015, they have already assisted thousands of customers and have outstanding customer reviews. ZenBusiness is known for its reasonable prices and the value laden packages these price points provide. It is also known for being socially conscious and giving back to the community. Overall ZenBusiness is the best value for money, especially since its incorporation fee includes a years’ worth of free registered agent services.

IncFile

Startups looking to incorporate on a very limited budget may be drawn to IncFile as they do not charge at all for their incorporation services, except the necessary state fees, and they will provide a year of registered agent services and a thirty minute business tax consultation free of charge. IncFile started operating in 2004 and has assisted over 500 000 customers, tens of thousands of which have left extremely high ratings online.

Northwest Registered Agent

Northwest charges $39 for its incorporation services and has assisted with multiple incorporations since its beginning in 1998. Northwest is well known for its outstanding registered agent services as they will scan every document received on a company’s behalf and not only those they are required to. This service is free for the first year if their incorporation service is used. They are also known for next-level customer reviews.

CorpNet

CorpNet charges $108 for its incorporation services, which is slightly more expensive than alternative options, but they do offer a 100% satisfaction guarantee. Customers also have 60 days within which to request a refund, a policy more generous than most other available options. CorpNet has a well-rounded formation package and their reviews are almost all positive.

Upwork

As at close of business on October 19, 2021, Upwork had a market capitalization of $7.53 billion and was trading at $59 per share. Upwork is a platform that connects freelancers to clients. This type of working structure may be on the rise which would make this a valuable stock to invest in.

GoDaddy

GoDaddy has the highest market capitalization of these companies, $11.79 billion and as at close of business on October 19, 2021, was trading at $69.67 per share. GoDaddy provides a domain registration service, a valuable tool for any startup as businesses need to register domains with their business name to ensure increased web traffic and to attract customers.

Final Thoughts

Given the sheer number of startups in the US each year and the success of these startups, startup stocks provide investors with a potentially lucrative investment opportunity. There are also multiple companies that are involved in the startup process although not startup themselves, such as LLC formation companies or domain name registration services. These companies have stable business models and growth potential as they continue to assist in the formation of new businesses each year. These therefore also provide another potential investment option for investors looking for companies with decent market capitalization and potentially reliable stock prices.

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Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at [email protected]
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