Share your insights or perspective on the financial matter presented in the input.

What should I look at before investing in a start-up?
Turukawa's answer is quite good, and for your own specific situation, you might begin by being sceptical about what you are getting for investing a few thousand dollars.  With the exception of Paul Graham's Y-Combinator, there are very few opportunities to invest at that type of level, and Y-Combinator provides a lot of other assistance besides their modest initial investment.   I can tell from your post that you think like an investor.  It is highly unlikely that the entrepreneurial programmers that you will be backing will be wired that way.   From the modest amount that you are investing, you are unlikely to be the lead investor in this opportunity.  If you are interested in proceeding, simply stick along for the ride, examining the terms and documents that more significant investors will be demanding.  Remain positive and supportive, but simply wait to sign on the dotted line until others have done the heavy lifting. For more insights into startups themselves, see Paul Graham's essays at www.paulgraham.com.  He's the real deal, and his recent essays will provide you with current insights about software startups. Good luck.