Investments for a startup: An investor point of view
We continue [ 1 , 2 , 3 , 4 ] to compare approaches to work in a startup in Russia and the United States. Today, Mark Andressen and Ron Conway ’s comments on the aspects of attracting investments and working with investors will be commented on by Sergei Negodyaev , director of project management for the Internet Initiatives Development Fund.Mark Andressen says that venture investments are more accessible to startups that are completely different from their competitors and show radical differences from them.
How would you rate such a statement in the context of Russian realities? Do you include this criterion for evaluating start-ups in the priority list?
')
I do not really understand what it means to "absolutely different." In international practice, the term “disruptive” is used, which can be interpreted as “revolutionary” projects breaking the established rules in some industry.
An example is the company Uber, which completely changes the landscape of taxi business around the world, or virtualization technologies Vmware or Parallels, which on one physical machine allow you to run one or more virtual machines, and then this technology allows you to build different solutions for end users.
Such projects have a very high yield potential due to a sharp restructuring of the existing paradigm, which allows you to quickly change the balance of forces in the industry. In this context, Russia is no different from Asia and the West, and we, like our foreign partners, are looking for opportunities for investment with the highest growth potential.
If we are talking about copy-kats, then - yes. Most Russian investors are very enthusiastic about projects that are simple and understandable in implementation, as evidenced by the large number of investments in such segments as ecommerce and digital entertainment.
Ron Conway stresses the need to maximize the use of the company's own funds - independent work without attracting investment. Do you have a ready-made recipe for those who would like to decide on the need to attract investments? What kind of projects without investments simply cannot survive?
The most correct thing is to develop the project at your own expense. Investment money is very expensive for the company, they can be compared with a very expensive loan with a rate of 60% per year.
Without investments, it is very difficult to develop technology projects, since their journey to the first revenue may take more than 12 months. Without investments, it is also difficult to develop projects aimed at creating a large user base without the task of quickly receiving revenue and reaching a self-sufficiency (Instagram, Telegram).
Mark Andressen cites the following statement as an example for startups working on attracting investment:
“I received seed investments and achieved such and such results. I eliminated such and such risks. Then I received an investment in round A. I achieved such and such results. I eliminated such and such risks. Here are my intended goals, here are my risks, and by the time I need investments in stage C, I will be in such and such a position. ”
Do you think this approach is quite reasonable? What else would be great to emphasize when communicating with investors?
This approach is beautiful and perfect. The task of the investor is to make money predictably. If a team comes to me that has been setting goals for many years and successfully achieving them without significant deviations, then I would give them money with closed eyes. The problem is that there are no such projects.
One of the main problems of the projects is poor communication with partners and investors. Such projects often present surprises that are not always pleasant.
But seriously, it is very important to understand the company's goals, both financial and strategic, as well as plans to achieve them. The more clearly and reasonably the project knows how to communicate information and protect its goals and plans, the easier and more pleasant it is to work with it, especially if it manages to achieve them.
Ron Conway advises not to focus on attracting investment, but to go through this stage as quickly as possible. Often, the founders consider getting an investment as their personal achievement, but in reality this is only a basic step on their path, which is better to get rid of.
Can you agree with this statement? What could you warn companies in the process of attracting investments from?
Absolutely and completely agree. Very often, projects boast that they attracted a round of financing, but do you often hear that a project “made” 30-50 million revenues?
Do you often see news like: “Our project has attracted 3 million paying users with more than 50% repeatability over the past 6 months”?
Investment is the fuel for your aircraft to get from point A to point B or bridge the chasm. But for this you need to have a plane that does not fall, or that has wings and an engine. If we understand that the plane “does not fly” due to, for example, the convergence of the unit-economy, then “burning up” investments is the same thing as “scaling losses”.
Why should anyone be proud of such losses? The entrepreneur must have a setting to "win." Investing here is just a tool to achieve this goal, nothing more.
Acceptance of applications in the 6th Accelerator of IIDF ends on March 6. If you have a project with a working prototype, a team and a promising sales market, you can qualify for an investment of 1.4 million rubles, a workplace in the center of Moscow and the support of our best experts. Fill out an application and learn more about the acceleration program here .
Other interviews with FRIA experts:
Source: https://habr.com/ru/post/286352/
All Articles