Repatriates Diary Part 2: How to attract investment in a startup, without connections and experience
In the last post, we wrote about how Ostrovok.ru attracted an investment of $ 1 million from the best investors in just 6 weeks, having only an idea.
We received a lot of positive feedback on that post. But there was a significant drawback: we described the process from the point of view of our previous experience and connections. Most of these recommendations are not applicable to the question of how to start your business in Russia without having connections and experience.
We really want to help the development of the local entrepreneurial ecosystem, and this post is an attempt to talk about how to run projects with nothing but desire.
Indeed, it is very difficult to start a business without any experience. Therefore, we recommend several years to work full-time in some company that knows how to raise investments and build teams to get the necessary knowledge. This is how my colleague Kirill started (on Slide) and me (on Google).
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The most important question is not relationships, but trust.
You should think about it from the point of view of investors. There are much more investors and money on the market than companies with worthy investments. As a result, investors are constantly looking for good investment ideas. But Russia seems to be a very dangerous place for investors who have not invested in it before. Therefore, potential investors are afraid of losing their money (and also look stupid in front of others).
Successfully performing these three steps is a test of you as a potential entrepreneur. If you think that these three things are too hard to do without having initial connections, you better not organize your startup. In a startup, all the time you need to solve complex problems with limited resources (no matter how much investment you have) and further tasks are incommensurably more complex than these three.
When you have such a basic background, the problem of trust is partially sidelined, and you start looking for investors.
It is worth noting that I do not read technology news, just to learn something for business or learn ideas for investors. I do it because I really like it.
This is the best site to explore entrepreneurs and investors. I already gave invites there and I don’t have them anymore, but you can find them yourself online.
AngelList / Venturehacks
The world's largest community of angel investors. They write in their blog is not often, but their posts are of very high quality.
HackerNews / Ycombinator
This is the world's most successful business incubator that has created companies worth $ 10 billion. At Hacker News, you can interact with a large number of talented people who make startups and learn from them. On Ycombinator, I recommend reading Paul Graham's essays - they are perfect for understanding the general attitude to startups in Silicon Valley, as well as getting philosophical, not practical, but very good advice.
Startup Company Lawyer
A good resource that explains many legal terms and the principle of operation of investment structures. This is a professional resource, so basic knowledge is required to understand the information.
Techcrunch
The world's largest techblog. Only some articles are good, but by reading it regularly, you will learn more about Silicon Valley startups.
Venturebeat
Good blog about venture capital and tech industry.
Silicon Alley Insider
Good blog about technology in general, although many articles previously published on other resources.
A VC
Blog top venture capitalist Fred Wilson (Fred Wilson). You can learn a lot of useful things in his posts, but for this you also need some base.
Oscar Hartman at FastLane Ventures
Oscar is the founder and CEO of KupiVIP, one of the most successful startups over the past few years. He was not an investor in Ostrovka, but he helped us for a long time with his connections and expertise. If you are a talented developer or manager looking for a mentor and an investor, this is a good opportunity.
Edward Shenderovich at Kite Ventures
Edward made the decision to invest very quickly - an hour after meeting with us. At that time, he helped us with ideas, connections, understanding of the market and hiring employees. He usually invests in companies at an early stage, but with a product. He spent a long time in Silicon Valley and therefore is very competent - we gladly recommend it.
By the way, my report on 404fest is devoted to the topic of investors. I speak on October 2 in the "Startups" section. Come!
We actively hire talented developers, online marketers and experts, as well as b2b sales managers. Our team consisted of 7 people at the beginning of the year, and now it consists of 65 people who came from companies such as Yandex, Booking.com, Euroset and others. We have a great office with a gym, free food, and a free schedule. Working with us is the best way to get connections with investors and experience in building your own brand.
In the next post, we will write about attracting a larger investment round at a later stage (we recently attracted a second round of $ 13.5 million).
Please let us know if you have any questions or ideas for this post.
We received a lot of positive feedback on that post. But there was a significant drawback: we described the process from the point of view of our previous experience and connections. Most of these recommendations are not applicable to the question of how to start your business in Russia without having connections and experience.
We really want to help the development of the local entrepreneurial ecosystem, and this post is an attempt to talk about how to run projects with nothing but desire.
Indeed, it is very difficult to start a business without any experience. Therefore, we recommend several years to work full-time in some company that knows how to raise investments and build teams to get the necessary knowledge. This is how my colleague Kirill started (on Slide) and me (on Google).
')
If you are a developer, online marketer or sales manager who wants to establish his company, come to work with us! You will learn more details at the end of the post.
Problems
Let's start with the key problems you face:- Investors do not know you and do not have confidence in you
- You do not know investors
The most important question is not relationships, but trust.
You should think about it from the point of view of investors. There are much more investors and money on the market than companies with worthy investments. As a result, investors are constantly looking for good investment ideas. But Russia seems to be a very dangerous place for investors who have not invested in it before. Therefore, potential investors are afraid of losing their money (and also look stupid in front of others).
Decision
You need to do some things to solve this problem:- Create a great team with shots from companies with brands known in the market.
If you can attract developers from Yandex to work with you, this will make investors more confident with you, since Yandex is a well-known, strong company. It also demonstrates the fact that you can convince people (and this is the most important quality for the founders of startups). - Find a few investors or advisors who are actively looking for projects that are known to other investors.
For example, by working with the founder of KupiVip as an investor or advisor, you are improving your brand because investors know about KupiVip and their investors. - Become an expert in your market, explore market leaders and their key financial metrics.
Read the 10 annual financial reports of global companies in your field, subscribe to industry blogs and forums, meet Linkedin experts and ask questions. Investors will feel more comfortable if you appeal to companies that they know, and if you deeply understand the subject matter of what you have got involved.
Successfully performing these three steps is a test of you as a potential entrepreneur. If you think that these three things are too hard to do without having initial connections, you better not organize your startup. In a startup, all the time you need to solve complex problems with limited resources (no matter how much investment you have) and further tasks are incommensurably more complex than these three.
When you have such a basic background, the problem of trust is partially sidelined, and you start looking for investors.
- You need to know who the best entrepreneurs in the world are in your area, and who are the best investors in your area.
Review investors in Crunchbase and find those who are interested in your field. Look for people with good connections, but with an unpopular profile. For example, everyone can write Reid Hoffman, but he does not have time to answer everyone. By the way, he does not answer us either :). - Make a brief (5 sentences) in the style of “elevator pitch” about who you are and what you do. Write sentences in clear and simple language.
If you start writing too clever, complicated things, you will be ignored and you will look silly. Follow Einstein's words: “Genius is not to complicate, but to simplify, without losing its meaning.”
Here is what I wrote for an example in 2 minutes (this is a theoretical example, this niche has become very competitive in the last 12 months):“Our team is talented young developers who are building Zappos in Russia - one of the five largest global markets where the footwear sales niche is not yet occupied. Before starting work on the project, I was educated at Moscow State Technical University - one of the three best universities in Moscow, where I won the first place in the Olympiad for programmers. My colleagues came from Yandex and Mail.ru, the two largest Internet companies in Russia, and we have an advisor director for logistics from Ozon.ru (the # 1 online retail store in Russia).
We have already created an alpha version of our product and are looking for an expert who can advise us on the commercial construction of a successful company. I noticed that you have experience building successful companies in this field in Germany, will you find 10 minutes to chat with us? ” - Start sending it to people (for example, through LinkedIn), talk to them and look for someone to contact who will be respected by potential investors.
Make sure that the people with whom you communicate have a reputation and connections, and can also be your mentor, that is, the person who will actively promote you. Then you can use their reputation to start a conversation with other people, and it will be much easier for you to communicate with them.
Basic reading resources
To have real knowledge in your field, you must be fanatically interested in it. When I leave work at one in the morning and come home before going to bed, I look at 30 different blogs about startups, marketing, online travel, I read about 300 articles. To make this process more time-efficient, use an RSS reader (for example, NewsRack for Mac).It is worth noting that I do not read technology news, just to learn something for business or learn ideas for investors. I do it because I really like it.
What I recommend reading
QuoraThis is the best site to explore entrepreneurs and investors. I already gave invites there and I don’t have them anymore, but you can find them yourself online.
AngelList / Venturehacks
The world's largest community of angel investors. They write in their blog is not often, but their posts are of very high quality.
HackerNews / Ycombinator
This is the world's most successful business incubator that has created companies worth $ 10 billion. At Hacker News, you can interact with a large number of talented people who make startups and learn from them. On Ycombinator, I recommend reading Paul Graham's essays - they are perfect for understanding the general attitude to startups in Silicon Valley, as well as getting philosophical, not practical, but very good advice.
Startup Company Lawyer
A good resource that explains many legal terms and the principle of operation of investment structures. This is a professional resource, so basic knowledge is required to understand the information.
Techcrunch
The world's largest techblog. Only some articles are good, but by reading it regularly, you will learn more about Silicon Valley startups.
Venturebeat
Good blog about venture capital and tech industry.
Silicon Alley Insider
Good blog about technology in general, although many articles previously published on other resources.
A VC
Blog top venture capitalist Fred Wilson (Fred Wilson). You can learn a lot of useful things in his posts, but for this you also need some base.
Good local investors
I also want to recommend two good investors in the Russian market, investing at the seed stage.Oscar Hartman at FastLane Ventures
Oscar is the founder and CEO of KupiVIP, one of the most successful startups over the past few years. He was not an investor in Ostrovka, but he helped us for a long time with his connections and expertise. If you are a talented developer or manager looking for a mentor and an investor, this is a good opportunity.
Edward Shenderovich at Kite Ventures
Edward made the decision to invest very quickly - an hour after meeting with us. At that time, he helped us with ideas, connections, understanding of the market and hiring employees. He usually invests in companies at an early stage, but with a product. He spent a long time in Silicon Valley and therefore is very competent - we gladly recommend it.
By the way, my report on 404fest is devoted to the topic of investors. I speak on October 2 in the "Startups" section. Come!
Come work with us
We actively hire talented developers, online marketers and experts, as well as b2b sales managers. Our team consisted of 7 people at the beginning of the year, and now it consists of 65 people who came from companies such as Yandex, Booking.com, Euroset and others. We have a great office with a gym, free food, and a free schedule. Working with us is the best way to get connections with investors and experience in building your own brand.
Next post
In the next post, we will write about attracting a larger investment round at a later stage (we recently attracted a second round of $ 13.5 million).
Comments and questions?
Please let us know if you have any questions or ideas for this post.
Source: https://habr.com/ru/post/129184/
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