Attracting investment in your business, how to attract investors to a project: ways and means

It’s great when an entrepreneur has enough funds necessary to run his business. But this is not always the case. In 9 cases out of 10, an entrepreneur is forced to seek third-party resources to invest in his business. To do this, you should carefully consider and plan possible ways to find financial investments and protect yourself as much as possible.

Let's consider options for attracting additional finance. Let's analyze who can act as an investor. We will try to provide practical assistance to an entrepreneur in need of financing by creating a step-by-step guide to finding an investor.

What is the procedure for attracting investors to participate in preventing bank bankruptcy and monitoring their financial situation?

The essence of the concept

These are investments of a private or other nature in any asset. It can be a financial instrument, product or commodity, as well as a project or startup. The idea is simple, a person has free money. And in parallel, there is a certain entrepreneur who is interested in third-party provision of financial resources. They are necessary to create, develop or expand a project. Accordingly, it is extremely logical for a citizen to simply transfer his savings to this company. So that with their help income can be increased. And in the form of receiving dividends, he can retain part of the profit. And also get back the entire amount spent.

Products

For warehouse For store For institution

On the other hand, the enterprise may fail. And in this option, the investor will not only not see any dividends, but even the amount spent in principle. The conclusion that follows is that there is always some risk involved. And it is this that often determines the type and method, as well as the possible amount of income. More risk means more expected jackpot.

The question remains how to properly attract and interest investors in your small business. How to find people who are ready to resolve financial troubles. Monitor special platforms? Or maybe put an ad in the newspaper? In fact, the advice is simple - you need to increase the investment attractiveness of your company. And then the search will be much easier, the interested investor will come forward on his own.

A foreign financial investor is not a private person

The main mistake of almost all Russian applicants is that they endow the term “foreign financial investor” with human qualities.
Sometimes you can hear job seekers express that they need “access to the investor’s body.” The idea of an investor as a man in a tailcoat and bowler hat is not at all true. An investor is a company in which each employee has a clearly defined scope of authority and is guided by approved rules. Therefore, it would be more effective to figuratively represent the investor as a process consisting of several stages that the applicant needs to go through. An applicant who cherishes the hope of gaining “access to the body” in order to quickly receive funding without any formalities is doomed to failure. Because "body" is an attribute of a natural person. Processes do not have a “body”. They are best characterized by rules and criteria. Therefore, the applicant needs to aim to ensure that his investment project complies with these rules and criteria. This is perhaps the most important thing that you need to clearly understand when you decide to attract investments.

Business Solutions

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What is it for

The answer lies on the surface. But not for beginners who have recently decided to try their hand at entrepreneurship. A company needs money at any stage. Especially if it is not even legally registered yet. It is thanks to either borrowed funds or investments that most enterprises begin their activities.

But even if the founders have significant capital to start with, and they do not need third-party funding to organize their activities, they will still need a methodology. After all, the new source allows:

Grow and develop, do not hold back when forming a financial strategy.
Increase turnover, quantity and quality of products, volume of service offerings.
Open spheres, additional industries.
Acquire subsidiaries or a completely new startup.
To master the horizons in geographical terms, cities and regions of the Russian Federation, the creation of branches.

Investing is a way to avoid stagnation. Whatever the initial capital, no matter how great things are going, you can always do better. It is possible to put an additional amount of money into circulation. And increase the expected profit by paying off investors, making your own company larger, more reliable and stable.

Learn to see a situation from different sides

Get rid of egocentrism and a sense of your own infallibility.
Then it will be much easier for you to understand the investor’s thinking. When communicating with investors and advisors, try to look at the situation from the perspective of all parties involved. Constantly ask yourself the question: what would you do in this situation if you were an investor/adviser? The ability to see a situation from different angles will help you be more flexible and easier to achieve your goals. If you see that the proposed investment matches your goals, then start a dialogue. However, remember that investors work exclusively according to their own rules and procedures resulting from the approved investment strategy. It is stupid to teach others how to spend their money. It is useless to try to change the rules of the game that have developed in the investment business over many years. The best thing you can do is to understand these rules and achieve your goals within them. If you suddenly see that the proposed principles do not suit you for some reason, then simply abandon the idea of attracting investment. Develop your business on your own.

Species diversity

Modern classification involves gradation into many types, depending on the period, final goal, and level of risk. We will highlight several techniques to make the task as clear and visual as possible.

The simplest thing is by timing:

Long-term. Often a period of more than five years is implied. But in some industries the period starts from three.
Medium term. At least a year. The limit is again determined by the industry. Three to five years, as we remember.
Short term. All the rest. That is, the period is less than just one year. It is worth knowing that in some areas there is also an extremely short-term time perspective. But this is usually not an investment in some company, but, for example, the purchase of binary options.

There is a division according to the degree of risk:

Conservative. That is, very safe, with an almost zero chance of failure. Such assets are usually needed to protect your investment portfolio. After all, they don’t make much money. But they insure their more dangerous brothers. At the same time, a conservative type portfolio can serve as a storage deposit in order to beat inflation with a small profit.
Aggressive. There is a real, tangible chance of losing your entire deposit. But the payback can reach several days. And in the medium term, there are cases of earning two thousand percent.
Average. The level of danger balances profitability. But there is almost always a clear bias in one direction or the other.

Positive attitude

Investors are very sensitive to the inner mood of the applicant. If it is positive, then, believe me, investors are willing to meet such an applicant halfway. The process speeds up significantly. There is no need to perceive investors as strict examiners whose goal is to find flaws in the project in order to fail the applicant. Their task is to identify and constructively solve emerging problems in order to subsequently complete a transaction. If the applicant perceives attracting investments as a battle for resources, and the participants in the investment process as an obstacle to the goal, then when the first force majeure situation appears, the process will come to a dead end.

Common myths about investing

Entrepreneurship will not survive without investment as such. But in the lion's share of cases, novice businessmen have a poor understanding of this mechanism and believe in several false stereotypes:

The main thing for investors is profit. No, the key aspect is the level of risk, the absence of losses.
This is analogous to bank lending. Absolutely not, the investor not only gives more than just finance (provides connections, advice, assistance), but also bears risks on an equal basis with the founders. The bank will always take what it has back.
The main thing is a unique product. This may be the case when it comes to ventures.
You can't share bad news. On the contrary, it is necessary. After all, the investor himself is personally interested in success. If the project loses, so will he. He will try his best to help and lead the company to success. Nothing can be hidden from him.

Before deciding how to attract investors to your business project, think about where the funds will be directed. And select the asset form. This could be a direct injection of money, shares and other securities, real estate and production facilities. There are plenty of options.

One last story

At a franchise exhibition in Paris, we met a guy named Dzhambulat. A simple guy from Ingushetia who owns a burger shop in the center of Paris. I asked him: “Where does an Ingush from a simple family get a burger in Paris?” He replied that he didn't have anywhere near the money for the restaurant, but there was a hypothesis that the owners of the 200 square meter premises in the center of Paris also had money to invest in his business. Then he began visiting the owners of premises suitable for a burger restaurant and inviting them to become investors. The hypothesis worked. He visited 200 premises owners, and 1 of them agreed. The lack of money, business experience and other things can be compensated by the number of attempts.

Basic ways to attract

Several can be distinguished, because bank lending, the sale of bonds, private loans and even the provision of deferred payment services can to some extent constitute a deposit.

But in a narrow sense, we are talking only about people or companies that allocate a certain amount of financial resources to an asset. And for this we will need to increase the attractiveness of the project in every way. It is necessary to show it as profitable and safe as possible, to convince of the relevance of the product or service, the presence of a customer base that will provide demand, and also to demonstrate differences from competitors, the ability to do business in their field and successfully advance.

Startups from Belarus in 2021 - taboo or opportunity?

Economic fluctuations are always cyclical, and any crisis brings not only difficulties, but also business opportunities. For Belarusian projects, the current situation is a chance to show the ability to find effective solutions despite the pressure of unpredictable environmental conditions. This is exactly what we expect to see in our future portfolio companies.

We have been working closely with Belarusians since the founding of the fund, and now Genesis Investments’ portfolio includes two companies from Belarus: the video processing application VOCHI and the family of educational mobile applications Basenji Apps.

We constantly meet founders with strong development skills and successful B2C sales experience. There is no doubt about the future of Belarusian startups, so we continue to look for interesting projects and are ready to invest. The forced relocation of many startups does not affect our decisions. We invest not in projects within the geographical boundaries of the state, but in talented people. Therefore, even those Belarusians who will temporarily or permanently work on their startups from other countries are still of great interest to us.

Attracting investors to a business project: instructions

To make the solution clearer, we will create a small step-by-step algorithm. It will describe in detail which actions need to be taken and which ones it is better to refrain from.

Step 1 - looking for a source of investment

Of course, our plan should start with this task. Various platforms are suitable for solving this problem. You can organize crowdfunding, which has now become very popular. This is how ICO projects often work. It is worth turning to the media, advertising platforms, from YouTube to social networks. Look for new connections, develop in the field. Alternatively, resort to professional promotion services.

Step 2 - resume

To some extent, this is a commercial offer. Which, however, is not aimed at the client’s benefit, but at the attractiveness of the project. This is how the expert will evaluate his profit himself. You need to show how good the idea is. How are you going to act, what goals and objectives are at this stage. Future prospects, team composition, established points of contact. And of course, a detailed business plan.

Step 3 - Choosing a Trustworthy Partner

You should always choose not the most profitable ones, so to speak, but the reliable ones. The same applies to deposits. Those who have not lost their deposit in the first months of work know this simple truth. Make sure it's reliable.

Step 4 - Dividend Form

Determine what exactly the person or company will receive as a result. Will it be a profit in cash or a share of the entire project. Whether the number of dividends is calculated from the income of the enterprise or from the amount of invested funds. There are many nuances, everything will have to be calculated scrupulously.

Step 5 - convey information to the target audience

Determine communication channels in advance. You can use several at once. The main thing is to present information in the most vivid form, in a way that makes the project look great. But no outright lies, otherwise your reputation will suffer.

Step 6 - negotiate

Confident, clear, polite and adamant. Stand your ground, voice the conditions in such a way as to show their convenience and profitability for your partner. But don’t make all sorts of concessions just to avoid losing an investor. Sometimes it makes more sense to refuse. What is important is to remember a simple rule. During negotiations, tell everything you wanted. Until the last word, don’t look for a reason to insert information, cover all the points.

Step 7 - conclusion of the contract

Here is the final stage. You can safely put your signature on the paper, but only if you have carefully read all the essential conditions.

Find your place

If you are thinking about attracting investments, then you first need to determine the type of investor that suits your interests.
To do this, you need to clearly understand the differences between financial and strategic, private and institutional, Russian and foreign investors, as well as analyze your goals and financial capabilities. Do you have liquid collateral to qualify for a loan? What unique assets do you have that would make a strategic investor want to form an alliance with you? Can you endure a long marathon with an institutional foreign investor? Balance the requirements typically presented by investors with your goals and capabilities and determine which type of investment is most preferable to you. Only after this start searching for an investor. When you meet an investor on your way, immediately find out whether this is really the type of investor you need. If this is not your type, then don't waste your time on it.

The very first mistake job seekers make is their lack of understanding of what type of investor is best suited for their business development goals. In most cases, when starting to search for investments, applicants do not even think about this issue. This negatively affects the process of communication with an investor, whom they mistakenly endow with qualities that are not characteristic of him - for example, applicants endow financial investors with the qualities of strategic investors.

Ways to attract investment, competent presentation

This is a proven method that always gives excellent results. It has been successfully used in many areas, from coursework to demonstrating a new product on the market. After all, a visual presentation, accompanied by clear and clear comments, allows you to construct a marketing speech as accurately and clearly as possible, emphasize beneficial aspects, and reduce the influence of negative factors.

The human moment takes its toll, the eye catcher stays firmly with the viewer, this image can make you fall in love with yourself. The content is determined by the entrepreneur himself based on the advice of professionals, marketers and managers. But there are several basic points that must be included.

Introduction. It should contain not only general information, but best of all a slogan. A sonorous phrase that evokes associations with the company.
Argumentation. You must prove to your partners that your proposal will bring them success, fight objections, and give logical arguments that they can fully understand.
Text. It’s better to make a couple of slides without visual accompaniment. Then they evoke the feeling that they contain the main information, which is mandatory.
Gain. But here the image influences more than ever. It is better for it to be a bright and powerful visual image with a short but effective caption.

Typical newbie mistakes

Let's look at a number of the most common mistakes that can completely ruin a budding relationship with a partner. Avoid them by all means possible.

There are no exact options for organizational issues. Most often, if retail sales are implied, for example, the aspect of the operation of cash registers is unclear, and there are no points for purchasing equipment and software. It is better to find a seller in advance who can bring tangible results. If we talk about an example, the Cleverence project would be the ideal performer. These are software solutions for accounting, inventory, installation and operation of online cash registers, and registration of product codes. The program is aimed at Russian legislation. This way you can show investors that there will be no problems with performance.
There are no exact numbers. It is better not to start negotiations without pre-prepared calculations. Especially if there are no specific dividend values. After all, they came to you precisely for them, for the future return on investment. It is worth showing it in all aspects.
There is no competitive war. Advantages compared to similar products in the industry are implied. Or some prepared cheaper options for supplies and equipment purchases. The ideal solution would be a unique and viable idea or model that is not yet available on the market.

Types of investment injections

Depending on the degree of participation in the project, investments can be:

portfolio - funds are invested in a group of projects, in several business areas or in different organizations at once;
real - capital is intended to finance a specific project in order to obtain real profit.

According to the characteristics of the investor, investments can be divided into:

government;
private;
foreign.

According to the nuances of the financed project, investments are distinguished:

intellectual;
production

If the investor can control his investments:

controlled;
uncontrollable.

Features on the Russian market

It is worth saying that our population has a very positive attitude towards investment. There are many independent platforms where you can easily find a great partner. A variety of startups are actively developing. But a clarification will be the fact that, unlike the West, private individuals in the Russian sphere are usually professionals in the industry. That is, experts who already have significant portfolios have been sending their finances to various structures for a long time. They are familiar with the latest developments and know the pros and cons of assets in detail. But ordinary people who have accumulated wealth usually invest money in a bank deposit or purchase real estate. They are not too attracted to untrustworthy paths. At the same time, there is another aspect. Active support from the authorities. Moreover, both at the regional and federal levels.

Main sources of investment

In addition to private investments, banks or the state can invest in entrepreneurs.

Government investments are “tailored” to specific programs. Their rules are very strict and cannot be adjusted. For the most part, these programs are designed for manufacturing companies, so not every entrepreneur can take advantage of government support. As a rule, government money is intended for the purchase of equipment, materials, and transportation costs. The entrepreneur will need to find funds for wages, advertising and other expenses on his own.

Bank investments, that is, loans “for business,” will not be given to anyone who wants one. In order to borrow money for a specific business, it must have already been started or the borrower must have another stable income. This is due to the need to pay bank interest.

Private investments are the most promising sponsors for a start-up entrepreneur. Among the numerous types of companies and funds that are ready to provide financial assistance at any stage of the project, any businessman can find one that is suitable for him.

One of the forms of investment convenient for beginning businessmen is business incubators - organizations that specialize in financing and supporting entrepreneurs at the beginning of their business journey.

As part of the “incubator”, a businessman can rent premises on preferential terms, he will be helped with accounting and legal support, and will be provided with consulting services.