Attraction of investments
Why is it necessary to attract investment in the project? First, to speed up the start. You can develop a product for a long time, slowly save money for its launch and release it to the market when it has already lost its relevance. Or you can use investments, launch on time and win your niche in the market.
Secondly, any existing business must develop, otherwise it will become uncompetitive. For development, investments are always needed: in new equipment, in the creation of a new product, in automation, in training people, and so on. The list is endless. In this case, you can use your own money or, if it is not available or not enough, also attract investments.
In order to understand how to attract investment, you first need to understand what is interesting for investors. Why would they want to invest in your project? To do this, let's turn to the definition of "investment".
"Investment is an investment with the aim of making a profit." That is, first of all, a potential investor is interested in how quickly and how many times his investment will pay off. This is what will need to be shown and proven on the example of your project. We recommend our material about investments in Belarus. But first, let's look at what investment methods exist and how investment activity depends on the stage of project development.
Investment methods can be divided into two groups:
investment without ownership
investments with participation in the property
The first includes all options for financing projects in which the investor does not receive a share in the company. This is the so-called debt financing. It means that the money will be given to the company on time and will be returned with interest income. Sources of such investments: bank loans, loans, loans, factoring, leasing and other methods.
Investing with participation in property includes:
Obtaining a controlling stake (share in the company). A controlling stake allows you to manage a business, make strategic decisions, and determine the course and direction of its work. Most often, the main goal of this investment method is not to make a profit, but to gain access to the resource market, the ability to use the company's technological resource. As a rule, these are foreign investments.
Investing money in companies whose activities are just beginning, but at the same time have serious development potential. Most often these are companies that create an innovative product or service. What is the risk for the investor here? A project may not “take off” for various reasons: from a mistake in technology to problems with a team. On the other hand, due to its innovativeness, the project can achieve great success and increase several times (and sometimes tens and hundreds of times) the initial investment of the investor. Venture investors invest money for a limited period (5-10 years), after which they sell their share.
Investments in the development of the company in order to obtain profit from dividends or interest. At the same time, the investor does not interfere in the management of the enterprise or project (except for rare exceptions).
We should also consider such a tool for obtaining investments as crowdfunding. The essence of crowdfunding is crowdfunding of the project. There are many fundraising mechanics with a crowdinvestment tool. Here are the main ones:
Stop googling "how to find an investor" and order the creation of presentations and business plans. It's not about them. One post - all the answers. Written by an entrepreneur for entrepreneurs.
Hello entrepreneur! Maksim Seryakov from the People's IPO accelerator for attracting investments. In one of my previous articles, I wrote what I had to go through to attract 33.5 million rubles to my business.
You need investments to grow your business. You have already visited banks, investment funds, turned to large investors and government agencies, negotiated with brokers and intermediaries - but so far there is no result in money anywhere.
And you are thinking about attracting private investors on your own.
If the text above is generally about you, then read the article further and you will save yourself at least a year of life on unsuccessful steps, mistakes and bumps. Below is a practical step-by-step plan for finding investors.
Step: Set your business goals
Imagine that you are driving your car to another city and decided to take more passengers for yourself in order to recoup the cost of the trip. Agree, it is important for them to understand where you are leaving from, where exactly you will arrive and when it will happen.
It's the same with investors. You need to understand your point A, where you are now and point B, where you are going. And you should have a route. A banal thing, but the investor acts here as a person who will give money for gasoline. Investments can never be an end, they are always a means.
And in order for an investor to invest money, he needs to understand where (from what indicators and figures) the business starts and where (to what indicators and figures) the business will arrive, and in what time frame.
In practice, this is the answer to a series of questions:
- What numbers do we start with, what is already there? How much revenue / net profit / number of clients do you have now? What is the “financial history” and retrospective of your business?
- Where will we come and when (what numbers will be) the business after the investments are poured into it?
- How much investment is needed and what will they go for? Why exactly this? Why will business numbers go up from how the money is spent? You will need 1-2-3 to prove to the investor that the attracted money will result in business growth (the connection between what the investments will be spent on and the company's growth)
- Describe the strategy, tactics and operational plan of the business, although would be in general terms, but do not delay or complicate. It is critically important to describe step by step what you will do in order to bring your business to point B in the presence of money, so that the investor understands that the proposal is professionally worked out and you are generally an adequate entrepreneur (the opposite is stupid proposals where vertical growth is promised and it is not supported by anything).