The goal of a venture investor is. Venture investment is it? Risk and prospects in one bottle! Where can a venture investor find a suitable project

A feature of venture investments is that they are usually intended for the launch, growth, development of a particular company, whose activities bear at least a slight shade of originality, uniqueness, i.e., roughly speaking, with venture financing, funds are invested in the implementation of some a new idea that has not yet been proven by the market to work. In this regard, venture investments involve enough high risk loss of capital by the investor; at the same time, in the event of a favorable development of events, they can count on impressive profits. Most often, venture investments are attracted to develop various innovative technologies, new methods of market development, etc. Those. venture investments usually become relevant where there is some kind of experiment, a certain amount of risk (associated with the possibility of unsuccessful implementation of the conceived idea). Accordingly, venture investments, as a rule, are long-term, because they are attracted with the aim of “inventing”, creating and promoting a particular project, which later (as its creators think) can fill a new niche in the market and bring a solid profit .

As a rule, the investor receives profit from venture investments not in the form of periodic dividends, but in the form of a (one-time) sale of his share in the business, which he financed at the stage of its inception.

The differences between venture capital investment and any other type of investment are as follows:

• 1) investments are made in exchange for a block of shares in a company in the early stages of development;
• 2) venture investments go to the company itself and finance the project of its growth and development;
• 3) the task of the investor is to ensure rapid growth in the value and capitalization of the business;
• 4) the investor assumes the financial risks of successful implementation, expecting high returns;
• 5) the period of "stay" of the investor in the venture company - from 2 to 5 years;
• 6) the investor is not interested in the distribution of profits and prefers to invest it again in business development - reinvest;
• 7) in addition to investing in the company, the investor uses his management experience and business connections;
• 8) the return of funds from venture investments is carried out at the end of the investment period in the form of profit from the sale of the investor's share that has increased in price.

Although, in addition to focusing on successful small enterprises with the potential for rapid growth, venture capital also has a number of additional features.

Here is a short list of the main distinguishing features:

Since, in order to realize investments with a profit, namely those made in venture enterprises, it is necessary that a new high-tech company enter the market valuable papers For the sale of shares, the owner of the funds invested in the company is not interested in dividends, but in the level of capital increase. Venture capitalists who have invested in venture capital companies tend to want to increase their capital by at least 5-7 times over 7 years. Since the entry of a venture enterprise into the stock market can be carried out, in best case, after 4 years from the date of investment, and, realizing this, the venture capitalist does not expect to receive a profit before this period. During this period, this capital is illiquid, and the amount of profit will become known only after the company enters the securities market, when their block of shares is sold to those who wish for an amount significantly exceeding the amount of funds originally contributed to the company.

And this "excess" can sometimes be quite significant. For example, in Russia, one small research team, thanks to a very modest investment (several thousand US dollars), managed to create the drug "Timogen", which has powerful immunomodulatory properties, interest in which was shown in several countries at once. As a result, only one license for the production of the drug was sold in the US for several million dollars. Such a profitability of several thousand percent cannot be given by any production project, and even by financial and banking machinations common in Russia in the recent past. Such an incredible increase in profits can only be caused by venture capital business.

A characteristic feature of venture investments is that the desire of the investor to acquire a controlling stake in the company is practically absent, which fundamentally distinguishes him from a partner or a strategic investor. The investor takes over financial risk, and other types of risks: market, technical, price and managerial, etc. are assigned to management, which has a controlling stake in the enterprise.

Given the nature of the venture business, almost any such investment, regardless of the stage of development of the new company, is a financial transaction with a high degree of risk, the degree of which, combined with courage and patience, can only be justified by the high profitability of the invested high-tech enterprise in the later stages of its development.

Taking into account the degree of risk, and the fact that in the event of an unsuccessful investment in the company, the investor will lose all invested funds, capital owners, in order to reduce risk, are directly involved in the management of the company, being members of the board of directors, as well as when investing by business angels. For the same reason, venture capitalists are often personally involved in the selection of investment objects, and still always strive to conduct several venture operations at the same time, therefore, they are ready to work with both new and existing ones, as well as companies preparing for sale.

In order to reduce risk, a venture capitalist usually distributes his assets among several projects, although it is possible that several investors support one project. To do this, with the introduction of venture resources, phased financing is used. Funds are allocated in small portions "tranches", in the slang of venture businessmen this means "through a drip", i.e. each subsequent financial injection is possible only after a successful previous one.

Also, venture investors, investing where the bank (for reasons of caution or under the charter) does not decide to invest, receive not just a package of ordinary or preferred shares. But at the same time, they negotiate a condition (by purchasing preferred shares) according to which they will have the right to exchange them for simple ones at the onset of a critical moment in order to similarly gain control over the “chondrous” company and try to take it away from bankruptcy by a radical change in strategy. Such actions are fully justified, because. Venture capitalists take huge risks by transferring their funds to shares in other companies, hoping to receive high returns, typical of the most successful companies in the field of high technologies, the share price of which increases several times over 5-7 years.

The decisive role in the success of an enterprise often belongs to the quality of management actions, and not to the fundamental idea that is the basis technological process and products. Therefore, a venture businessman pays less attention to the subtleties of a scientific idea, and prefers to thoroughly assess the potential opportunities for capitalization of this idea and the managerial abilities of the head and administrative level of the company.

The venture investor continues to work with the sponsored company until it not only firmly "gets on its feet", but also becomes a "tidbit" for potential buyers. When such a moment comes, the former owner invested funds, now the owner of a sought-after block of shares, considers his mission over and exits the investment, releasing funds frozen for several years and receiving a well-deserved profit.

To withdraw funds, a venture capitalist has two very real options:

• - sell your shareholding stock market, for this, by first placing shares in an open subscription "initial public offering-IPO";
• - either directly sell the company or part of it to such a buyer who offers an amount that provides the investor with the amount of profit predicted by him. Eventually venture investor, as a rule, forever says goodbye to the company that was his “native” for 5-7 years. And judging by the practice of the money, effort and time spent, such a “parting” does not cause sadness.

And, despite the fact that venture investments are inherently risky, it is this excessive risk of investing in an unknown company that represents the most significant limiting factor for a potential investor considering where to invest free capital with the greatest profit. Buy shares in the oil business, invest in new company developing the technologies of tomorrow, which is fraught with risk, or putting funds in the bank, at least at a low, but guaranteed interest rate.

Although completely risk-free financial operations, in principle, do not exist - life is replete with examples when collapse befalls and oil companies, and the most reliable banks go bankrupt (here, Russians remember the collapse of banks in 1998), and the risk, which seemed so big and more than obvious to many, in reality turned out to be clearly exaggerated. In addition, it turns out that those who dared to take risks received a very significant bonus for their risk.

Another very significant feature of venture capital investment is that venture financing is always very sensitive to fashion and takes into account its trends. Most often, investments are made in those industries that are associated with a quick and profitable opportunity to sell high-tech science-intensive products that are already in high demand, or this demand is just emerging and threatens with big profits.

For example, at the end of the last century, a mass enthusiasm for reading CD devices began, and immediately venture capitalists began to invest huge amounts of money in this industry with great willingness and on favorable terms for companies. And with the departure of this fashion, the flow of investment dried up. The same phenomenon was observed when the cell phone craze emerged. It can also be predicted in the near future for services that have ceased to be knowledge-intensive services to provide access to the Internet. Of course, after some time, the production of software for personal computers, which will also lead to a reduction in venture investments in this sector of the economy, since there are no, and in principle, no permanent sectors of the economy, forever attractive sectors for venture investment. Only the desire of venture capitalists to increase their funds will be eternal.

Hello! In this article, we will talk about venture investments and introduce you to the main types of these investments. They are increasingly used to market new startups and help drive forward-thinking innovations.

Today you will learn:

1. Which are classified as venture capital;
2. What are the pros and cons of this;
3. How to get venture capital for a project.

The word "venture" from English can literally be translated as "risky business". This perfectly reflects the meaning of such investments. They can bring either a complete collapse or a huge profit, which will more than cover all the possible shortcomings of the project.

Having appeared in our country relatively recently, venture has already contributed to the development and successful formation of some companies: Lingua Leo, Rolsen, the Astrum gaming holding or the KupiVIP sales club.

What is venture capital investment

Venture investments are understood as investing in various investments that are risky and long-term. They are often used for young projects based on IT technologies related to the development of applications for gadgets, medicine or.

Sometimes they are attracted to operating enterprises in case of complete modernization.

The main differences from the usual direct investments:

• High probability of loss Money, no guarantee of a positive result;
• The capital is issued rather "on parole" of the future entrepreneur;
• Cooperation with inexperienced and novice businessmen;
• The first finances are invested at the idea stage.

In conventional strategic investment, the lender prefers to invest in an already promising enterprise. It has a well-established and proven way to implement a product or service, and the risks are minimized and well controlled.

The goal of the investor in this case is to receive regular dividends or to seize a controlling stake, to completely buy out the enterprise.

It is better to explain the principle of venture type of capital investments with a specific example.

Example. The young entrepreneur has, but does not have the means to implement it. The investor is ready to cooperate and finance innovative developments for a share in a project that does not yet exist. This is a big risk, because it is almost impossible to predict success. But, in case of luck, the borrower can get a huge profit, not limited by monetary limits.

Venture investments differ significantly from strategic ones.

There are several characteristic features:

• More often, borrowed capital is provided for a talented person or a promising team than for a specific business plan;
• In case of a successful outcome, you can get back the invested money no earlier than in 3-5 years. An even longer stage of "promotion" for scientific startups that require complex elaboration of details and special tests;
• The investor initially knows that his share in the new established company will be sold. He does not seek to get full control and is constantly looking for new promising ideas;
• For the first few years, there is no question of profit or dividends: any income is spent on further development and increasing turnover. The investor himself is interested in this and is in no hurry to withdraw his investments until the company starts stable and profitable work.

With venture investment, there are only two scenarios for the development of events: either the company will become successful and the profit from the transaction will more than cover all costs, or the project will stall and incur losses.

In the second case, the investor completely loses his investment, and the failed entrepreneur does not compensate for the damage. This is another important difference from direct investment, where a bankrupt businessman is required to repay the loan in full with high interest on top.

Types of venture investments

The exact concept of the term "venture investment" in the economic literature does not exist. It's special financial instrument which is risk capital. It is used to develop and bring to market a new enterprise whose technology is based on innovation and scientific development.

In Russia, the venture investment market has been actively developing only since 2000, but it has already brought many successful projects into business. An inexperienced businessman gives away a certain part of the future business, but this is better than completely abandoning the idea.

What are the advantages for the investor himself, who does not receive any guarantees and may suffer large financial losses?

Among the obvious advantages of this type of investment:

• Maximum and unlimited profit with successful promotion of a business project. There are many real examples when the return of funds exceeded the investment of 1000% in just a few years;
• For the "promotion" of the project is often quite a small amount. Getting a bank loan for young and inexperienced entrepreneurs is an unrealistic problem in domestic business practice. Venture investors are more willing to invest in interesting projects without a visible prospect, without requiring 100% guarantees and collateral;
• Working with each new case brings a special experience, helping the investor to grow as a businessman. Financial flair develops and own portfolio of investments is formed. In addition, venture capital investment is increasingly attracting state structures and is encouraged by them, therefore it adds a certain fame and solidity to a business angel.

The entrepreneur receives real money for development, which is not subject to huge credit interest. He does not respond with property in the event of a fiasco, he feels more freedom of action for self-expression. The investor shares his knowledge, connections and tries to make the invested project profitable. We can say that the first invests intellect, and the second - free finances.

Almost the only disadvantage of this type of financing is the too high risk of a complete loss of investments. Most of modern projects associated with virtual reality and the Internet, so it is simply unrealistic to calculate profit. According to statistics, only 10–20% of total number funded projects.

Features of startup financing

The most "tidbit" for any investor are innovative projects. can bring huge profits and fame for a business angel or venture capital fund. With a $100,000 investment in Amazon, entrepreneur Thomas Ahlberg received $26 million in resale of the brand's stake.

There are several ways to find an investor for your promising startup:

• Join special business incubators for beginners. These organizations, for a certain percentage of the share of the future enterprise, are ready to offer a place for an office, assistance from lawyers and economists, training in the basics of entrepreneurial activity and close cooperation;
• Use personal acquaintances and connections. The method is ineffective for young talents who are just entering the market. Here, family members are more likely to act as investors;
• Participate in special annual competitions or forums. For example, the youth congress on Seliger annually attracts thousands of innovators and investors from all over the country, is encouraged Russian government at the highest level.
• Place data on exchanges or platforms for startups. In Russia, the online platforms inproex.ru and startup.ua are popular. They represent an extensive base, helping companies interested in investing to start working together.

In order to launch a startup to the market faster, it is better for a team of entrepreneurs to use all available search options. The most demanded innovations are in the field of medicine, online sales, Internet technologies and applications for gadgets. Everything more funds interested curricula for different ages and "green" environmental developments.

Sources of financing

The Russian venture investment market is only gaining momentum. In Europe and the USA, such projects account for at least 40% of all investments in small and medium-sized businesses.

A novice domestic entrepreneur can seek help from the following organizations or individual investors:

• Closed partnership programs, which are based on the personal funds of a large businessman.
• Public investment capital funds.
• Venture funds owned by corporations or banks.
• State.

In Russia, it is difficult for a future entrepreneur to take Bank loan without providing serious guarantees. Banks prefer to cooperate with established companies that have real estate and a long period of work. Therefore, it is better for talented inexperienced startups to turn to venture funds or private business angels.

In some situations, relatives or acquaintances can become investors. If they have free capital, they can invest it in a new business project and get excellent returns in a few years.

How a venture fund works

Special organizations that are focused on providing investments to interesting start-ups and innovative business projects are called venture funds. The purpose of their work is to profitably invest available funds into a promising company and make huge profits after the sale of their share or shares.

The creators of such financial institutions become successful top managers or experienced businessmen who have stable corporations behind them. They are ready to voluntarily provide their experience and finances to startups who are able to interest them in a serious and reasoned business plan.

Some funds combine the capital of several people. They brought to market such projects as LinguaLeo, the developer of popular games Alawar, Rolsen and Ozon brands.

Simplified, the stages of venture financing using the example of a fund look like this:

1. Organization managers look for interesting projects on forums, exhibitions or social networks.
2. The selected startup is carefully analyzed by economists who try to evaluate the benefits and possible income in case of successful completion.
3. The development of a business plan begins. It includes all stages of the development of a new enterprise, channels and markets for the sale of products are selected.
4. A detailed growth strategy is drawn up, taking into account possible force majeure circumstances.
5. A special investment agreement, which indicates the shares and rights of the parties.
6. The enterprise with the support of investors starts work. A good venture fund accompanies young entrepreneurs at all stages and provides them with various consultations.
7. If the startup is successful, the fund exits the investment by selling its share or shares in the financial market.

This complex and risky path has been taken by such world-famous corporations as Microsoft and Apple. In Russian practice, the most successful (to date) venture projects are Yandex and STS-media. The first in 1999 attracted borrowed funds 2 funds, raising the annual profit from 70 thousand dollars to 300 million dollars. The second was the development of well-known Russian investors MTG Broadcasting AB and ABH Holdings Corporation and increased capital to $2 billion.

Popular venture funds in Russia

Startups should carefully consider the choice of a potential lender. The further destiny of the project, its stable and successful work depends on it.

Before submitting an application, you need to familiarize yourself with the reviews and achievements of the organization, its requirements and suggestions. It is advisable to personally communicate with entrepreneurs who are already cooperating with the fund and have reached a certain level.

Among domestic startups, the most popular are:

1. Russian Ventures. The company is interested in new IT-technologies. Considers small startups and quickly responds to requests from applicants.
2. ABRT. Successful fund with great authorized capital. Actively working with projects based on new software and services on the Internet, he can "boast" startups KupiVip or Oktogo.
3. Adventure II. Works with aspiring entrepreneurs who offer new developments in the field of online commerce and interesting software for smartphones. Begins to cooperate on the most early stage and actively assists with advice.
4. RVC. State venture fund that promotes technological and scientific projects. But he always acts as a second investor, investing small amounts.
5. Softline Venture Partners. One of the most successful investors with 13 promising companies in his portfolio. He is more interested in telecommunications and artificial intelligence technologies.

Most venture funds have through which they accept applications. You can also get acquainted with representatives and requirements at various business forums or specialized exhibitions.

Cooperation with business angels

Under the poetic name hides a new kind of investor. These are individuals who invest in startups, helping them develop and enter the market. Like venture funds, they prefer to sell a stake in an established company and earn good profits from this.

They act independently or team up with other investors to participate in projects. This is the most closed group of private investors who offer investments ranging from $50,000 to $1 million.

The main differences between business angels and venture funds:

1. They invest only their own (personal) funds. Many manage the finances of investors, so they do not want to take risks and cooperate with unpromising business projects.
2. They are engaged in investing professionally, therefore they cooperate with newcomers in business, they are not afraid to delve into new areas of activity.
3. They make decisions more flexibly, guided not only by "naked" calculations, but also by their own experience. They are more involved in a business project, transferring their skills and knowledge to aspiring entrepreneurs.

Well-known entrepreneurs act as business angels, former top managers reputable companies. They try to invest their savings or free funds in innovations, understanding their full prospects for the future. Among the famous foreign investment- expensive brands Yahoo!, Alibaba, Intel and Biogen.

Step-by-step guide to venture capital investment

When startups have chosen a fund they would like to receive funding from, they face the task of how to correctly present the project in order to get a positive response.

Of the thousands of requests to the address of the investor, only 10% attract attention and are considered. The average processing time for an application is one to six months. Therefore, it is important to present a business plan and calculations in such a way as to stand out from similar ones and get money for development.

There is an approximate step-by-step scheme for a novice entrepreneur:

1. Choosing a venture fund for further cooperation. You should first analyze the work and portfolio of the organization, study the requirements for business projects, which startups are of interest to it. If necessary a small amount in 200-300 thousand dollars, you should not look for funds with millions of offers.
2. We carefully prepare the presentation. Many entrepreneurs mistakenly believe that representatives of venture capital funds are only interested in the layout and naked calculations. At the review stage, they study the composition and cohesion of the team, its readiness for force majeure situations and the rhythm of work. The main thing is to immediately identify the benefits for a potential lender.
3. We are negotiating with fund managers. A presentation usually takes several minutes, so it should be dynamic and memorable, give maximum information and not contain "water". It is necessary to show leadership qualities and the ability to control the situation. It is better to work out all the little things and numbers, because “uncomfortable” questions are not ruled out.
4. Working on a business plan. At this stage, venture fund specialists join in, helping to work out each item. A detailed business plan is drawn up for 3 years and provides for methods of promotion in the market, features of the distribution of profits and all possible costs for modernization. This is the financial model of a business project that will soon turn into an operating enterprise.
5. We sign an agreement with an investor. On average, the development of a business plan and all legal nuances lasts no more than 3 months. After that, the developed agreement is proposed for signing by the parties. A novice entrepreneur is unlikely to see pitfalls in it and understand all the consequences, so it is better to involve experienced lawyer to study it. This will help to avoid enslaving conditions in further cooperation.

Domestic venture business is developing rapidly. At the end of 2016, Russia ranked 4th in the world in terms of risky investments. There are at least 20 venture funds operating in the country, business angels with big names have appeared. Unfortunately, growth is constrained by the lack of special government subsidies and grants, a low percentage of liquidity of investment capital.

Traditional private equity paradigms can go against the principles of venture capital in many ways. Entrepreneur Derek L. Bittar identified seven major differences between venture and traditional investors.

What most investors don't realize is that traditional investment paradigms don't need to be applied to venture capital investments. The typical problem in new ecosystems is that the classic private equity paradigms are still in place, and no one is implementing the best principles of venture capital.

Successful venture capitalists are not afraid of failure. In just one day, a startup can completely transform its business model, because such complex decisions need to be made as quickly as possible. Therefore, management must be ready for change. Even more than that, quick course corrections should be part of the day-to-day work of a startup. is one of the most popular tricks of any successful startup.

VCs understand that startups have to make decisions quickly and flexibly in order to capture markets, destroy old segments and create new ones.

Short investment cycles

The traditional investor seeks to invest in the growth of one company over several years.

Venture capital operates on a shorter time frame (12-18 months per cycle) and involves subsequent rounds of investment.

Large companies plan long periods of growth and ensure positive cash flows for this. They take out loans to pay operating expenses and keep their cash flow going in the long run. Share capital increases in response to external circumstances to cover costs. In other words, what is bought with shares must be tangible.

Startups, on the other hand, rarely have a positive cash flow, and even more rarely generate profits. Thus, they do not have to rely on borrowed funds, and the only way to finance the growth of a startup is to invest in share capital. The funds are used for operating expenses and to achieve certain milestones that will help to carry out the next rounds of investments.

Venture capital is used to cover operating expenses and achieve short-term goals in order to move on to the next investment round.

constructive approach

Traditional investors hold positions on the board to control the development of the company.

Venture capitalists hold positions on the board to be as useful to the startup as possible.

Traditional investors prefer to influence strategic decision making in companies. They invest in the business they see as promising, without regard to the ability of the current management. These executives are often replaced by those recommended by the investor. If these performers do not cope, others are found in their place.

From the point of view of a venture investor, such a policy can hinder the development of a truly promising business. Instead, they choose to invest because they believe in the ability of the founding team to realize their vision. Venture investors practice a constructive approach. Even if they have their own position on certain issues, they trust the vision of entrepreneurs and leave the final word to them.

Successful VCs establish governance rules that give startups the opportunity to experiment and lead the company to exponential growth.

Competition and cooperation

Traditional investors often compete with each other for the right to make a deal, and sometimes even conflict within the board of directors.

Venture investors believe that it is possible to cooperate with competitors for the benefit of a startup.

Traditional investors rely on their ability to find opportunities that others don't. Therefore, transactions are concluded in conditions of strict secrecy and bureaucracy, requiring the signing of non-disclosure agreements, letters of intent and other documents. Negotiations usually take place in an aggressive manner in order to avoid the appearance of "undesirable" players.

Venture capital investors are also in no mood for competition. However, the spirit of cooperation and coexistence is also prevalent in this industry. Often, different investors join forces to increase a startup's chances of success. From time to time you can see that venture investors are really proud that they were able to attract one of their colleagues to the deal. Moreover, often, to save time and money, no one signs a non-disclosure agreement, and paperwork begins already at the stage of an agreement of intent.

Competing VCs may cooperate if it is to the benefit of both parties.

A venture investor is a person who provides equity financing to those companies that have a high development potential. And the funds invested by a venture investor in a company are called venture capital.

The main goal of a venture investor is to make a profit from investments that are invested in a company with a high growth potential, and the ability to manage the company's fund. Therefore, in order to grow the company, a venture investor buys various promotions of this company and becomes its full shareholder.

By purchasing shares of a company, a venture investor becomes its partner. At the same time, he has a risk of losing his money in the event of bankruptcy of this enterprise, because the enterprise is not obliged to return money from shares already sold to its partner. And then, when the company goes bankrupt, the venture capital fund is reset to zero.

To resolve such risky situations, a venture investor invests his funds not in one company, but in several at once, thereby forming the so-called portfolio of securities, expecting a high return on investments invested in successful "portfolio" companies, in the event of the bankruptcy of any of the companies .

And in order to reduce the risk of financing to a minimum, a venture investor has to carefully study all business ideas, projects of this enterprise, and market dynamics even before financing.

Each venture investor tries to pay attention to a certain type of company, while being engaged in a certain area. In addition, companies at different stages of their development are in the focus of attention of various venture investors. Some of these investors are engaged in companies that are at the initial stage of their development, when there is a high risk for investments, someone is engaged in expanding companies, well, and someone focuses their attention on companies whose formation is in the final. In addition, there are venture capital investors involved in private equity and leveraged buyouts. And most of them invest in companies that are at such a distance that they can be visited.

By investing their funds in the company, the venture capitalist does everything to help this enterprise succeed. They conduct various consultations with entrepreneurs, assist in obtaining valuable information from the markets, help establish contacts with clients, etc.

But VCs make mistakes too. And, sometimes, they do not do very well with their partner companies, depriving their co-founders of income. Therefore, entrepreneurs also need to know everything about those investors with whom they are going to work.

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In world practice, a company is able to attract investors if the pace of its development ensures stable growth. Of greatest interest is investing in startups that are at the level of self-sufficiency and more. But there are other indicators:

• For a B2B company, the success criterion is the conclusion of a number of contracts for the integration of the promoted product.
• For marketing, media, and online client services, real user acquisition must be at least 6% per week.
• If the business idea involves the release of specific products (hardware startups), prerequisite there will be a working prototype and a positive assessment from the consumer, for example, on crowdfunding services.
• If the intensity of the company's development is characterized by a stable growth of more than 10%, this is a marker of success and funding proposals will be actively received from the investors themselves.

For domestic start-ups, the criteria for assessing the attractiveness for an investor, in addition to intensive growth, include the presence of a formed main project team (dream team). This includes:

• Entrepreneur or manager with experience and understanding of the industry market.
• A developer (programmer) with unique skills and at least five years of experience in a large company.
• The team must ensure the creation of a product base and its presentation on the market. The rest of the team members (marketers, designers, accountants, lawyers) are not so important for investors, as they are easily replaceable without compromising the project.

Problems that reduce the likelihood of attracting investments:

• No product patent or intellectual property rights.
• Startup team members work on other projects.
• Personal differences among team members.
• The complexity of scaling the project.
• A small share of ownership of the company by its founders.

Seed and angel investments

If the agreed conditions are met, the project easily receives its first seed investment. They also belong to venture, but they are not yet in full scale. This is an upfront investment focused on launching an innovative product and expanding its market share. Seed financing is the most risky investment, but provides (if successful) the most high income compared to investments in later stages.

The easiest way to get the initial investment is from a business angel. This is the name of private investors of a startup, providing assistance at the earliest stages in the form of funding and expert support. Angel investments are often implemented using crowdfunding platforms (equity crowdfunding) to find investors and startups (AngelList, Venture Angels, Runa Capital, Mangrove Capital Partners, StartupPoint, StartTrack).

Business angels, not having large venture capital, can attract each other to investment clubs as co-investors. The starting amount of contributions to the club for an individual is on average $1000 per year, and for companies from $3000 annually. At the same time, the potential return on investment is expressed as a percentage of the startup's income (royalties).

How to find an investor for a project

On the practical side, venture investors can give much more to a young project than additional financial resources for development. Competent interaction on professional level will allow the project team to:

• Establish new useful business contacts.
• Work out a development strategy based on the investor's previous experience.
• Review and evaluate the product from the standpoint of financial attractiveness.

When choosing a startup idea, investors conduct a thorough analysis of the company and the market sector in which it is located. Being experts in certain areas, they deliberately give preference to related areas. And an experienced manager takes this into account when choosing a candidate for cooperation.

The main directions for finding investments

• Usage personal connections . Disadvantages - long and laborious process, unless you personally know interested and willing to invest professionals. The advantage is a higher level of investor confidence.
• Entry into business incubators (business accelerators)- organizations supporting young projects for a certain percentage of further profits or a share of the company. They provide space for startups to work, information support, accounting and legal services, and also help to attract investments.
• Participation in startup competitions. Possibility of direct communication with a large number of potential investors. Presentation of the project at the regional, national and international levels. Obtaining useful experience and funding through grants, cash prizes.

Problems of startups when working with an investor

• Understanding the risk, the investor can leave the project during the crisis or promote its sale to a large company, regardless of the interests of the team. A guarantee for the company for a positive outcome will be the correct distribution of shares in the conditions of termination of the contract or sale of the project.
• Investors may have ulterior motives to devalue your startup in order to buy it out or bring in valuable team members to work on other projects.
• When working with a startup, a venture company forms corporate rules for management and work that must be followed. For a creative project, this can be a source of conflict.

How to find a startup to invest

The investor simultaneously works with several projects. He initially understands that a startup can become unprofitable. According to statistics, out of ten companies, only one becomes successful. Therefore, the expected profitability of investments in startups should be at least ten times greater than its initial volume. Professional investors do not wait for a promising startup to turn to them with proposals. They explore the market, working in all directions, the most priority of which is joining venture capital funds.

The fund's tasks include building a company development strategy, selecting highly specialized specialists and providing legal support for the project. Their essence lies in the formation of a collective investment portfolio for investments in a large number of projects. Funds differ from business angels in that they use equity and attract funds from private and legal entities. The advantage is the ability to conduct risky activities at the legislative level, including lending to companies. They can also encourage each other to co-invest.

In addition, investors track the finalists of awards and competitions for the title of the best startup. They take part in conferences, seminars and presentations of new projects. They monitor crowdfunding platforms, Internet databases of startups and thematic blogs.

Problems of investors with startups:

• You need patience and a clear understanding of the prospects of the idea. The project may become profitable within a year or only after ten years, which is impossible to predict.
• The team's passion for the idea of ​​a startup at the expense of its profitability provokes the emergence of conflict situations.

What documents does a startup provide to an investor?

To receive investment in start-up projects, a company needs to submit its business idea documented. At the first stage of negotiations, the following list of documents is submitted:

• Teaser. A brief promotional summary of the project, which describes its essence, an assessment was carried out competitive environment and target audience, forecasts are made for the coming years. Sent to the investor for initial review.
• Presentation. More detailed description startup. Served with a positive response of the investor to the teaser.
• Memorandum. Evidence of the effectiveness of the strategy and justification of the provisions given in the presentation. It is a mandatory application.
• Description of the financial model. A document representing a scheme for generating profits, distributing expenses and moving cash flow. It is presented in the form of tables and diagrams.
• Conditions of the investment agreement. Explanation designated purpose invested funds, their volume, distribution scheme for the implementation of the agreed list of tasks. The conditions under which the participants will be able to terminate the contract are given.
• Agreement on cooperation, the signing of which transfers to the investor a share in the company. It may be preliminary, as the conditions may be adjusted in the course of further negotiations.

From the point of view of the global economy, venture investments are a natural stage in the evolution of the business sphere, which is due to intensive development information technologies and acts as the most promising mechanism for interaction between investors and startup projects.