The realities of the investment market in startups

We all know very well the rule that says: "You should not take other people's money if you cannot use it with benefit." Where the latter means not buying an apartment and a Range Rover, but investing in future profits.

Recently, a new series of South Park was released, in which, in a sarcastic form, they showed the position of young people to such an important step as investing in a startup. To be specific, it is expressed in these words: “We are paid money for the fact that we do not do“ anything ”. We just have a beautiful name. ” And this is absolutely wrong.

Venture Company Goals

Sometimes in the IT sphere one gets the feeling that there are more investors than those who want to create their own startup. But we know that this is a pure lie. And such an illusion appears as a result of the purposeful work of a limited number of companies, whatever name and name they call themselves.
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Such an organization of activity was inherited from professional sports, where about 40000 units of initial material are required for the education of one Olympic champion, which is filtered stage by stage. After all, everyone is inspired with confidence that it is he who, spending the best years of his life, will be able to stand on a pedestal with a gold medal. And then suddenly there are serious injuries and chronic diseases, and no one needs him anymore.

You are taught to say the right things, you are shown some of the information and are prepared to take the exam at the end of the stage. Further, the selection is strictly carried out and the sown group is transferred further, where they are again preparing for the exam. And so until there are no people left who need an investor for his purposes.

In addition to a good idea, investment companies are engaged in a much more mundane task, namely HR management. To serve one "champion" requires a lot of specialists, sometimes no less outstanding and resolute. And there is no more effective way to get them, than to repurpose them from “unsuccessful” startups for their business. You heard stories when startups were originally prepared for later evisceration, aren't they?

And this whole game is wrapped in a romantic and sophisticated candy, called "Investing in a startup", where everyone can change the world. Where actually the "pale young man with burning eyes" runs.

Own game

No matter how friendly and positive the relationship between the owner of the idea (project) and the investor is, it is necessary to clearly understand the situation and not to defend your interests. This is a pledge as a successful cooperation, the way it would not be strange, but also to obtain investment.
Types of startups that we really need investors.

Business School. Unfortunately, there are not so many professional founders among us who have learned how to manage cash flow and work with investors. And the latter refers not to those indicators of the recoupment of the project, the contractual base and the investor’s exit from the project, which the investors themselves constantly teach us. A much more subtle understanding of the investment meta.

They say about such people: “You are a good person, but it’s difficult to cooperate with you”. And everything consists in the fact that a person knows and is able to receive from the investor no less than he spends on the project himself, both in monetary terms and in physical terms.

Such startups are not very fond of, but if possible they try to transfer their own companies to management positions.

Own company. The most desirable "startups" for investment are teams that have a working project at the level of self-sufficiency and above, who are well aware of the state of their market and their needs. They easily answer the most important questions for investors and know the estimate for investments.
Those. Suppose you have a company that is engaged in the wholesale supply of products for sushi bars throughout Russia. You are one of ten companies that claim to be the moral leader in this segment. But you want to go to the actual leaders.

You request investments to create a web service for booking wholesale purchases (breaking the cargo into units) in order to reduce the cost of sales managers, automate business processes and attract a small market segment (single sushi bars).

You know the market, you have customers, you know your competitors and the capabilities of your market. And investments are needed for a specific purpose, in this case, the conquest of the small clients segment. For such projects, the question of finding an investor is usually not complicated.

"Subsidiary" . There are cases when large companies finance projects that they themselves need in the future. Those. companies are cheaper and more reliable for their image to enter into several startups, and in case of success, completely redeem them. This, of course, is not a venture capital investment, but investors are working closely with such guys.

The main market offers startups

The main applicants for investment are people who do not have a clear understanding of the business, and also have not entered their money into the business. And the point is not that it is difficult for them to get investments, but that they absolutely do not need to receive them. Although, succumbing to the general "hysteria of success", they do not see it.

Therefore, guys, if you are not one of the three types of startupers that investors are interested in, you should not waste your precious time searching for an investor. Either you will find a fraudulent offer that will leave you without pants, or you will soon lose the joy of life from the constant word "No."
On a note

Most recently, on one silicone website published an analysis of applications from a certain fund, where a company representative actually "dipped" people with their applications. But on the page of the fund itself there was a phrase on the Olympic system: “We need you”. #rvchabr