How to find an investor

What to do if your own funds are not enough?

 Going to the bank for a loan is not the only option.

You can find an investor. Investments allow you to create a new product or scale up existing production.
Finding an investor is not difficult if you know where to look.
It seems that investments are about technology startups and IT companies in Silicon Valley.
However, classic business also needs them. Thanks to investments, entrepreneur
receives:

financing for the development of existing ideas;
* a fresh look from an “outside person” who is also concerned about the profitability of the project;
* additional contacts that come with third-party attachments;
* growth in the importance of the company after investing in it.
As you can see, investments bring not only financial injections to a business, but also business connections,
recognition and much more. However, you won’t be able to find a sponsor on the street. We'll have to show
perseverance, ingenuity and insight.

What you need to know before looking for an investor

Only legal entities can count on investments shown in films.
Those who invest money in your company become members of the company in return. Because of this
Businessmen are often advised to develop an enterprise using their own funds.

Sponsors are not counting on 10% of the authorized capital, but 30–40% more. If the founder
less than half of the organization will remain, his motivation to develop the product will dry up. He
will lose contact with him.

This won't happen right away. He and the investor will have different views on development, and behind this
Scandals or omissions will follow. The project will not benefit from this.

If you are opening a “classic” business - a catering establishment, a repair shop,
store - do it without attracting investor funds. In this case there is no need
register a legal entity and maintain accounting. Individual status
the entrepreneur allows this.

If you need money, you can contact the bank. They will have to be returned, but credit
the financial organization will not interfere in management processes.

Entrepreneurs who start a technology business take a risk when they go to the bank. Such companies
they create, for example, voice assistants, televisions, fire protection systems, and so on.
There is a possibility that the project will not take off.

As a result, the company will not be able to repay the debt, but this must be done. You'll either have to take more
one loan to cover the previous one, or start bankruptcy proceedings.

To avoid such problems, startups are looking for private investment. Along with growth
financial indicators of the company, its value increases. The latter is especially important because
who invests money.
You should not look for an investor when your company has no funds or is in debt.
There is a risk that you will receive money on extremely unfavorable terms.
Preparing to find an investor
You can just come to the fund, introduce yourself and ask for money, but the journey will be
to no avail. Even if you have prepared a brilliant presentation.

Don't be lazy and follow these four steps:

* create a concept product;
* find out from users their problems;
* analyze unit economics;
* prepare a pitch presentation.
The implementation of any technological idea begins with the creation of a minimum viable
product (MVP). Startups are testing the service with early users. For example, you can create
mobile application and monitor reviews. Additionally add a subscription, which
offers advanced functionality.

The main thing is not to go too far with the first users, so that unnecessary glitches do not occur.
Ask potential customers about the problems your product can solve. Not
talk about the benefits of your product and ask what they need.

Calculate unit economics, that is, determine business earnings depending on
profitability of one product. You and the investor need to know the indicator. He shows, he will bring
whether the project is money and how much.

Pitch presentation is a brief presentation of a business idea. It answers questions that
investors may ask. Present on slides:

• what problems the product deals with;
  * what money is needed for;
  * how will you spend them;
  * what results do you expect.
  In the presentation, focus on the main points, say what problems the product solves

How to understand how much money you need
To get money, justify this need. A financial model will help you with this. IN
it includes income, expenses and analytical information.

You will find out how much the project requires per month, when it will pay off and whether there is growth potential.
The financial model will show how long the funds raised will last. This way you can predict whether you need
There will be additional injections.

It is up to you which indicators to highlight. If you want to beat back your startup costs, take a look at
profit and time period.
There may also be additional costs: purchasing equipment, paying taxes,
salary. All this must be taken into account in the financial model. They write to it all the time
changes that arise so that the plan is updated and accordingly.

With the help of a financial plan, they predict when the company will recoup its costs. The "project" will bring profit
in five months. In this case, investments are needed for 7–10 months in advance.

Where to find a sponsor
Finding an investor is a serious task. If you need a small amount, ask for it from
relatives and friends. You can tell them more about your idea and convince them of a loan. But
Such a tool has one glaring disadvantage - money quarrels between loved ones. Keep this in mind.

The state is interested in business development, therefore it offers various support measures.

Grants and subsidies can be used as investments. The complexity of the tool lies in
collecting a variety of documents. But you don’t have to pay anything to use the money. In return
You will need to report that the funds were spent exactly for the purposes for which they were taken. Otherwise,
you will have to return the entire amount.

Don't rely on grants as the only source of funding for your business.
You may not receive the full amount you need - each program has a maximum limit
allocated funds.
There are also communities with investors on the Internet. They have their own websites and conditions
receiving investments.

Platforms are created by foundations, industry associations and business angels. The latter are
investors with extensive experience and a serious reputation. They invest or
suggest those who can do this.

Technology firms often turn to the Internet Initiatives Development Fund for help.

Young companies not only need funding, but also help launching a product.
It is provided by accelerators. Such organizations “take a startup under their wing” and share
capacities, allocate premises for work and provide mentors and tutors.

An additional advantage of business accelerators is that “their study group” does not
limited to one project. This means you can share experiences with others
"learners".

Based on the results of the training, startupers can receive offers from real investors.

In addition, accelerators hold meetings between aspiring technology entrepreneurs and
investors. Participation in the forums is free. But if you can present your idea to someone,
get money or business contacts.

You can also use a more classic tool: visit an investment firm
or venture fund. Be prepared that the idea will be subjected to serious testing.

They will help you in exchange for a share in the company. It is sold when the organization starts
demonstrate high financial performance.

If independence is important to you, try crowdfunding. There are many platforms on
which are announcing a fundraiser. A certain time is allocated for this. If during this period
the required amount will not be collected, the money will be returned to the donors.

This method of attracting investors is most suitable for creative people,
capable of captivating the audience with a project.

You can also find a private sponsor on websites with advertisements. Publish information about
searching for a partner on our website. Indicate for what purposes this is needed and write what
you have the resources.

Immediately clarify whether you are ready to share management with a partner or are waiting to receive money,
which you will pay off gradually.

How startupers are deceived
Be careful when presenting a project to those who come to you on their own.
Be prepared that if your business does not need investments and is at the MVP stage, they may
there will be people willing to invest in the product.

It would be wrong to refuse such an opportunity. But trust everyone who comes to the meeting,
not worth it. Perhaps they are trying to steal your idea.

You need to be wary when “business sharks” begin to show interest in your idea:
corporations and their subsidiaries. If you spend several times with the same people

meetings, and questions relate to the functioning mechanisms of your product, put
negotiations are on pause. Say that you are already entering into an agreement with another organization.

Truly interested companies will try to outbid the offer.

If your meeting with potential partners ended on a good note, but they abruptly
disappeared, which means they were interested in the product not for investment purposes.

Pay attention to those who come to negotiations. A large delegation is not a sign
that the corporation is interested in your idea. This is a distraction to find out
secrets of the project.

A non-disclosure agreement or
agreement of intent. Those who want to steal the idea will refuse to sign the documents. But
they will not stop those who are truly interested in the project.

It will be even safer if you register your invention at the patent office.
A “potential investor” may offer to create a joint venture for your project,
which will own the development rights. The company will assure that if “the deal doesn’t work out,”
you will return everything to yourself at market value.

This can put you in an extremely unfavorable financial position.
You can interest a real sponsor by showing a working business model. And also the startuper must convince that he is able to scale it.

“Which platforms should I look for an investor on? Depends on the amount of investment required. If speech
If we are talking about an existing business, it is easier, no matter what, to work with banks. Can
get credit money without collateral.

It is clear that this is not investor money, but this tool provides a relatively predictable
result.

A technology entrepreneur shouldn't worry about having an idea stolen because it's "not worth it."
Nothing". Much more important is how it is implemented and how it gets to the market.

“Therefore, you shouldn’t worry so much about it, unless you are communicating with people who
can implement your idea better than you yourself. But then you just need to realistically evaluate your
the contribution in the form of an idea is not very large.

But this does not mean that you do not need to sign any binding documents. And check
your potential partners based on their business practices and reputation - this is more important.

Business at different stages does not need the same sponsors. For example, at the start of a project
It is better to seek financial support from venture investors, business angels or grant givers.

When a project is running, you should focus primarily on borrowed funds. Also
try contacting funds, strategic investors. These players are capable of significantly
influence project performance.

Conclusion
Banks, companies, accelerators, venture funds - they are all investors.
Official relations with such organizations are available only to legal entities.

If you expect that a sponsor will be interested in your idea based on hot speeches and
bright presentation, then you are wrong. A business case must be provided
required amount and concept product.

It is better for new projects to try to raise money on crowdfunding platforms.
You can also contact your loved ones. Business accelerators are also a good option.
who, in addition to money, share management experience.

Be skeptical of those who come to you with an offer of help. For good
intentions can hide hidden desires.