How to attract investment in a startup. Part 2
This is the second part of the conversation that we started here .
Learn how to develop a project with minimal investment
You will look favorably in the eyes of investors, if you have a plan for the development of the project without additional investments. Even better, if you really can realize this plan.
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In this case, you will be sure that you will succeed. And that means that the investor will have more confidence and loyalty towards you.
Only you can decide for yourself who to be: a start-up who has brought his project to a critical point, waiting for manna from heaven, or an adequate businessman who lives within his means, but is developing steadily. This does not mean that the latter does not need extra money. In this case, the money will only accelerate the development process, and not just reanimate the project.
Of course, there are exceptions - projects that can not be developed in a short time and without large investments. But you better not be such an exception.
Be able to stop in time
School and university are long over. Working for good grades does not make much sense now. You should not try to attract as much money as possible just because a lot of money is a good evaluation of your work with investors. Do not try to be better than someone in business to attract investment. This is not a competition. Take as much as you need and stop.
When you need money the next time, you will raise rates and will look for larger investors. You should not fall into the illusion that the invested efforts to attract the largest possible amount will certainly be justified and will have a positive impact on your business. Everything has its time.
Beware of investors trying to bargain
There are situations when an investor tries to knock down your price. The amount you want does not suit him, and he seems to be trying to convince you that he knows better how much you need. Such arguments as “other investors will not pay you more”, “your requests do not correspond to market prices” are used.
Of course, if you have very little experience, you should check out this information. But in other cases it is better to stop communicating with them as soon as possible. Do not waste time in vain.
Choose the best option now. Future unpredictable
Probably it happens that you hesitate, hope that a better option is about to appear. Someday. And when do you need a result from investing in your startup? Sometime too? Do not try to predict the future, otherwise you can miss what is in the present.
This statement, rather abstract at first glance, directly relates to the topic of startup development. First, the result you want to get yesterday, so that the project does not stop in its development. Secondly, the fundraising regime inevitably comes to an end and the mode of direct work on the project, which was discussed in the first part of the article, begins.
If you pull in with the answer, investors can get away from you. On the other hand, if you are required to make a decision immediately, do not allow yourself to push. In a hurry, you may not take into account some "minor" details, which can then go sideways. Therefore, if you no longer have time and you need to make a choice between several offers of investors, then it’s best to give yourself a time limit of three working days for reflection.
Rule 25%
At the initial stage of development of a startup, under successful circumstances, there is a temptation to sell a significant part of the company in order to immediately improve the financial well-being of the project. If you, for example, sold 40% of your company and continue to raise capital, then investors may have doubts about your account.
Are you really interested in the active development of the company? Or are you trying to sell it? You risk being misunderstood. Therefore, a common practice at the initial stage is the sale of no more than 25% of the shares of their company.
Let someone engage in attracting investments.
If there are several co-founders in your company, then it is worth entrusting the search for investors to one of them. Then the rest will be able to focus on the direct work on the project.
Of course, between all partners there should be enough trust and understanding. The situations, of course, are different, but this requirement basically plays a key role in the life of the company.
A partner who negotiates with investors on behalf of a company is usually its executive director. In any case, he must have the highest authority in the project, even if this person is not a manager or a marketer.
Of course, all co-founders can participate in the final stage of negotiations. Especially when it comes to large investments.
Prepare a commercial offer and presentation
In general, this is not advice, but just another reminder that this is important. These materials will judge your company, so they must be of high quality. Commercial offer and presentation should accurately and briefly answer the most important questions for the investor:
• Why is this a good idea?
• What have you already achieved?
• What do you plan to do next?
Sometimes investors are asked to send them a presentation of your project. Just do not say, please, that you did not have time to do it.
But more often, practice shows that a request to send a presentation instead of setting a meeting indicates a weak investor interest.
Stay human
Some investors often wear a mask of arrogance or even indifference. They probably believe that business has no place for feelings. But, on the other hand, if you meet in person, the human factor comes into play. And here it is up to you to decide whether to use it to your advantage or become the same “business machine”.
No matter what anyone says, personal contact takes place between you and the representative of the investor. You are discussing conditions, there may be disagreements and misunderstandings that, obviously, is not beneficial to anyone. So be diplomatic, develop objection skills, and just be open.
And then, it is likely that the opposite side will begin to behave differently.
There is nothing supernatural in this advice, but for some reason it is often not taken seriously.
What if tips don't work?
Of course, there can be many reasons. There are no clear answers here. You can put forward several assumptions. But first answer the question: are you working enough?
If your project has not interested anyone yet, then it is better to switch to its active revision.
The overall market situation may be unfavorable for you.
Perhaps you should work on your self-presentation skills, the ability to convince.
Perhaps you are just late, and the investment went into other projects.
In any case, it should be possible to wait and try again with new forces.
Everything is easier than it seems
All the tips above are pretty simple. It is not necessary to apply them all at once or constantly check with them. Take advantage of what suits you, what seems right to you. This is not a panacea for poverty, but no one claims this. Here are the recommendations that work for many companies that have arisen as a result of numerous trials and errors.
Learn how to develop a project with minimal investment
You will look favorably in the eyes of investors, if you have a plan for the development of the project without additional investments. Even better, if you really can realize this plan.
')
In this case, you will be sure that you will succeed. And that means that the investor will have more confidence and loyalty towards you.
Only you can decide for yourself who to be: a start-up who has brought his project to a critical point, waiting for manna from heaven, or an adequate businessman who lives within his means, but is developing steadily. This does not mean that the latter does not need extra money. In this case, the money will only accelerate the development process, and not just reanimate the project.
Of course, there are exceptions - projects that can not be developed in a short time and without large investments. But you better not be such an exception.
Be able to stop in time
School and university are long over. Working for good grades does not make much sense now. You should not try to attract as much money as possible just because a lot of money is a good evaluation of your work with investors. Do not try to be better than someone in business to attract investment. This is not a competition. Take as much as you need and stop.
When you need money the next time, you will raise rates and will look for larger investors. You should not fall into the illusion that the invested efforts to attract the largest possible amount will certainly be justified and will have a positive impact on your business. Everything has its time.
Beware of investors trying to bargain
There are situations when an investor tries to knock down your price. The amount you want does not suit him, and he seems to be trying to convince you that he knows better how much you need. Such arguments as “other investors will not pay you more”, “your requests do not correspond to market prices” are used.
Of course, if you have very little experience, you should check out this information. But in other cases it is better to stop communicating with them as soon as possible. Do not waste time in vain.
Choose the best option now. Future unpredictable
Probably it happens that you hesitate, hope that a better option is about to appear. Someday. And when do you need a result from investing in your startup? Sometime too? Do not try to predict the future, otherwise you can miss what is in the present.
This statement, rather abstract at first glance, directly relates to the topic of startup development. First, the result you want to get yesterday, so that the project does not stop in its development. Secondly, the fundraising regime inevitably comes to an end and the mode of direct work on the project, which was discussed in the first part of the article, begins.
If you pull in with the answer, investors can get away from you. On the other hand, if you are required to make a decision immediately, do not allow yourself to push. In a hurry, you may not take into account some "minor" details, which can then go sideways. Therefore, if you no longer have time and you need to make a choice between several offers of investors, then it’s best to give yourself a time limit of three working days for reflection.
Rule 25%
At the initial stage of development of a startup, under successful circumstances, there is a temptation to sell a significant part of the company in order to immediately improve the financial well-being of the project. If you, for example, sold 40% of your company and continue to raise capital, then investors may have doubts about your account.
Are you really interested in the active development of the company? Or are you trying to sell it? You risk being misunderstood. Therefore, a common practice at the initial stage is the sale of no more than 25% of the shares of their company.
Let someone engage in attracting investments.
If there are several co-founders in your company, then it is worth entrusting the search for investors to one of them. Then the rest will be able to focus on the direct work on the project.
Of course, between all partners there should be enough trust and understanding. The situations, of course, are different, but this requirement basically plays a key role in the life of the company.
A partner who negotiates with investors on behalf of a company is usually its executive director. In any case, he must have the highest authority in the project, even if this person is not a manager or a marketer.
Of course, all co-founders can participate in the final stage of negotiations. Especially when it comes to large investments.
Prepare a commercial offer and presentation
In general, this is not advice, but just another reminder that this is important. These materials will judge your company, so they must be of high quality. Commercial offer and presentation should accurately and briefly answer the most important questions for the investor:
• Why is this a good idea?
• What have you already achieved?
• What do you plan to do next?
Sometimes investors are asked to send them a presentation of your project. Just do not say, please, that you did not have time to do it.
But more often, practice shows that a request to send a presentation instead of setting a meeting indicates a weak investor interest.
Stay human
Some investors often wear a mask of arrogance or even indifference. They probably believe that business has no place for feelings. But, on the other hand, if you meet in person, the human factor comes into play. And here it is up to you to decide whether to use it to your advantage or become the same “business machine”.
No matter what anyone says, personal contact takes place between you and the representative of the investor. You are discussing conditions, there may be disagreements and misunderstandings that, obviously, is not beneficial to anyone. So be diplomatic, develop objection skills, and just be open.
And then, it is likely that the opposite side will begin to behave differently.
There is nothing supernatural in this advice, but for some reason it is often not taken seriously.
What if tips don't work?
Of course, there can be many reasons. There are no clear answers here. You can put forward several assumptions. But first answer the question: are you working enough?
If your project has not interested anyone yet, then it is better to switch to its active revision.
The overall market situation may be unfavorable for you.
Perhaps you should work on your self-presentation skills, the ability to convince.
Perhaps you are just late, and the investment went into other projects.
In any case, it should be possible to wait and try again with new forces.
Everything is easier than it seems
All the tips above are pretty simple. It is not necessary to apply them all at once or constantly check with them. Take advantage of what suits you, what seems right to you. This is not a panacea for poverty, but no one claims this. Here are the recommendations that work for many companies that have arisen as a result of numerous trials and errors.
Source: https://habr.com/ru/post/285942/
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