How to attract investment in the start-up

Every startup needs the money in the air. In the early stages of attracting investment is the biggest headache of all startups. Usually nobody wants to believe, even in the most wonderful idea, very few investors are willing to be the first.

In this article we will talk about raising funds in innovative projects and the situation on the IT-market of investments. So we strive to make it easier for those who have already decided to try his luck in the fight for the "long dollar" investors.

Features IT-market investments

Today it is difficult to come up with an epithet to describe the situation on the IT-market of investments. You can call it sverhblagopriyatnoy for startups. But even this is not enough to reflect the optimism of investors in relation to IT innovation.

investment volumes hit record

More recently, for sowing conventional rounds were considered investments in the region of 50 000 to 500 000 dollars. Today, the average seeding rounds is estimated at 1-2 million dollars. Sometimes they go to $ 5 million, and it is not considered to be the limit. investment volumes lettered in monthly rounds hit records.

High demands on the team

Investor optimism is not shared by all the teams, since an increase in investment volumes increase, and requirements for companies. Particularly serious approach to the competencies of teams without history and without reputation. It is no secret that the vast majority of startups in this category.

A characteristic feature of today's investors is that they invest to a greater extent is not an idea or business model, and in the people who will implement the idea and use it monetization scheme.

Investors always pay attention to the metrics and formal growth rates, which is a very serious problem, and greatly complicates the task for the money seekers.

Capitalization growth projects

Another IT-investment market trend - growth of capitalization projects. The more the investor is afraid of the competition, the more it invests in the project, seeking to gain an advantage. This is used, capitalization is growing astronomically, but sometimes her nothing.

Even 10-15 years ago, the capitalization of IT-companies to reflect the real figures, such as the amount of income and the size of the audience. Today, many simply inflate the figures to attract the next round. As a result, the bubbles burst naturally after long periods of regular, often stormy, but the formal growth.

Sometimes it helps to expertise, but this measure is also further complicated and bureaucratized attract money.

investors

easier today to call those who do not invest in start-ups. To invest in innovative projects has become almost a rule of etiquette. Startups fund large IT-corporations (Google, Microsoft, Wargaming, Facebook, Atlassian, Alibaba), investment associations, venture capital funds (ABRT Venture Fund, ABRT Venture Fund, Accel Partners, Admitad Invest, Sequoia Capital, Tiger Global Management), as well as business angels middling, banks, fintehorganizatsii.

There are more forms of investment such as crowdfunding and equity crowdfunding. These instruments involve investment due to future users of the product. It works well with games and the development of gadgets.

There are examples of large-scale private investment in start-ups. For example, the co-founder Brian Acton, WhatsApp has invested $ 50 million in the Signal messenger.

Another typical source of money to start-ups, are at the stage of ideas, are investors of the FFF group (Family, Friends, Freaks - family, friends and crazy). We know that many successful startups first investments received from this source.

Ways to attract investment

Output IPO

Reliable and traditional tool to attract money in the IT-project is the placement of shares on the stock exchange, ie IPO. To carry out the IPO, for example, in the United States need a long time to pester organizations such as the CES (Commission Securities), to become a joint stock company, and then still find a couple of million dollars on advertising campaign.

It is believed that the IPO is suitable for mature projects, and may not be effective enough to start-ups. In this case, Google at the time denied that claim.

ICO, or tokenseyl

As an alternative to the placement of shares is often used ICO, or tokenseyl. When tokenseyle attraction of money is due to the sale of its own cryptocurrency. It is believed that the United States and the European Union cost effective ICO equivalent to 500,000 dollars. This amount will address the issue of advertising and legal registration of the public sale kriptoaktivov.

In the early stages can help crowdfunding (equity crowdfunding). To raise funds suitable platforms such as Kickstarter. Future users reset the developer to "support pants" during the preparation of the product for the market, and that, in turn, is obliged to transfer them to the result of his work, and in the case of equity crowdfunding - and even share profit.

Such forms are good low cost. To Kickstarter enough to write a short summary of the project, place a few photos and promotional video, show command. The rest will be a platform. Recently, a project on Kickstarter with interest are major media journalists, that helps a lot to solve the problem without the expense of advertising.

incubators startups

A special place among investment attraction tools occupy incubators (accelerators). They are looking for startups and investing money in them. Projects performed homework and acceleration are automatically brought into focus the major investors.

Considered the most prestigious incubator 500 Startups and Y Combinator, investors trust them, and easy enough to invest in projects that pass there is acceleration.

The volume of initial investments incubator - 150 000 dollars. For this, he gets a 7 percent stake in the company. Part of the money will be charged for tuition and other startups spend as they see necessary. Usually incubators come with an easily scalable ideas and realistic business models, others are denied.

Rules negotiations

For investments necessary to maintain quality conversation. Sometimes a great idea and a working business model does not require discussion, allocate the money fast, but this is rare. Most often there is a careful study of the project team and during the negotiations. At this point, the main thing - do not screw it up. To do this, you need to follow a few important rules:

1. Do not focus on the fact of the investment and the required amount. Is more about profits and how to obtain it than about the needs.
2. Offers several business plans and business models, which will be designed for a different development of the situation with the product.
3. Achieve precise answers to your questions. Ask when a person decides whether he needs to discuss investment in your project with partners and so on.
4. Prefer bold experienced investors who are willing to be the first to invest in your startup.

Total

Attraction of investments in start-up - it is always difficult, often ambiguous and sometimes even unpredictable. There's really hard to give advice, but those outlined above, the project will increase the chances of survival in an aggressive competitive environment. Investment optimism reached its peak, and now, perhaps, the best time to start-ups.

see also

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