To expand your wealth and achieve specific financial goals, you’re going to have to make some investments. However, those investments come with the significant risk of potential loss. Fortunately, the investment world has grown to offer more investment options and ways to assess those options. This includes more opportunities for individuals and companies to get involved in entrepreneurship by investing in new business ventures.

Even though there are tremendous opportunities to uncover that next “unicorn” startup, the reality is that it’s more than just luck or your gut that determines whether you pick a winning investment. Here are some guidelines on choosing the right investment for your financial and strategic objectives.

Start With What You Know

First, look at potential investments in an industry or business segment where you already have some degree of expertise. Investing in what you already understand raises the probability that you will select the right investment vehicle. For example, it might be a complementary application or service to your own business. In that scenario, you are likely to better understand whether the investment will be worth it, and you can assist the entrepreneur by providing advice or direction.

On both accounts, you increase the chances that the investment will pay off, according to Joe Gardner, entrepreneur and CEO of venture development firm VentureDevs. “Focus on your strengths. Start out in an industry you’re familiar with, especially if you’re new to investing,” he advises. “If you spent your career in commercial real estate, for example, you would be in the perfect position to judge startups hoping to find a niche in that space. You may also be able to add more than just capital to a startup in an industry you understand. You could pass along valuable advice or leverage your network to help its founders succeed, which should help make you feel more comfortable when you’re just getting started.”

Immerse Yourself in the Startup Environment

Traditionally, there has been a large gap between you, the investor, and what you invested in. Choices like stocks or mutual funds distanced you from the company. Even with real estate, you may not have always been able to view your investment firsthand or interact with those connected to the investment. Due diligence could only be achieved by looking at financial statements, business plans, and other documentation.

Now, there are so many ways to interact with startups that you may want to invest in, which is a good way to feel out whether an investment is the right one for you or your company. For example, there are pitch events, hackathons, and startup industry conferences that put the founders in front of you. You can ask questions, see demonstrations, and listen to their strategies for building out the business to determine whether it aligns with your goals, beliefs, and understanding of the opportunity. Having this level of engagement will help you determine whether you have selected the best investment.

Study the Management Team

It’s easy to focus on the numbers when evaluating a potential investment. While the financials are an important consideration for any investment, the potential for business success or failure can also be identified through the caliber and character of the management team.

Look for platforms where founders have shared their thought leadership. This includes blogs, industry sites, and social media channels. What they say is integral to understanding how they think and approach growing a business. This in turn will tell you about the type of return you might expect. Then, it’s important to see whether their words align with the results they’ve garnered to date. There’s no underestimating the importance of “walking the talk” when it comes to building credibility and trust with stakeholders.

Identify Differentiating Factors

Many markets are becoming increasingly saturated with similar products and services. If a company doesn’t offer anything new for its target audience, the likelihood of its achieving a sizable return may decrease over time. Look for a startup that can illustrate how it can effectively solve a critical issue for the target audience with something new. Those unique attributes can spark excitement with potential customers who believe they can’t do without them. As a result, your investment could pay a larger return over a longer period of time.

Know What to Avoid

Finally, weed out investments that aren’t likely to produce a return. Start with the rule that if any opportunity seems too good to be true in terms of what it promises, it probably is. Although you may seek a business idea that is truly unique, beware of those that don’t have a proven product or service. Also, stay away from business ventures that involve questionable industries. These include online gambling and cryptocurrency casinos, which have a high fraud risk, a tarnished reputation, and a complex regulatory environment. By following these guidelines, you will increase your chances of selecting a startup investment that will deliver your desired yield.