What to prepare
At the first stage of a project, it is often recommended to make a lot of documents: description of the concept, mission, necessary regulations – i.e. materials without which new team members will have a hard time understanding what your project is about. It’s not a fact that you will necessarily need all the files later in your work, but you will definitely need them when you’re drafting key documents for investors.
Detailed project presentation
You should definitely have a document ready from which a person who does not know the scope of your project will understand what you do, for whom and how. The document answers the usual questions: what we do, who we do it for, how we do it, who we are, what our plans are, who our competitors are. If you, like me, are thrown into a working stupor by open blank files, then use the presentation template at canva.com – there are already structured templates there with minimal design and icons for you to visualize processes and figures with.
Project Business Plan
Even if you haven’t made any sales yet, you should still have an idea of where the money is in your project, however small and not soon. But if your project doesn’t involve making money in principle, it’s probably in the social or art sphere, and you’d be better served by sponsors rather than investors.
Road map
A document that will spell out what you plan to achieve, when and how. It should consist of several milestones and a description of the processes and resources that will help you get there.
Where I am: identify the stage of the project
To choose the right potential investor and project presentation strategy, you must first determine what you have. There is a simple classification for projects in the first stages of development.
Pre-seed – you have an idea, a team, a working prototype, hypotheses about the audience and sales channels, confirmed by small figures. That is, you have a project that has some people in it, and the project is working confidently, albeit on a small scale.
Seed – you have bypassed all the pitfalls of the previous stage, haven’t gone crazy, haven’t gone to Nepal and are now ready to grow dramatically and strongly.
What stage your project is at will determine your investor search strategy: some funds may specialize in projects of different stages. When you apply to a particular fund, you will need to indicate what your current project status is.
If your stage is confident pre-seed and you haven’t essentially released anything yet, that doesn’t mean you can’t find an investor. The first option for finding an investor would not require you to have a finished product.
On the benefits of hackathons.
If you have a team of developers, even a small one, be sure to participate in thematic or corporate hackathons. A hackathon is a short-term event (most often held on weekends), where teams or individual developers solve a problem announced by the organizer. In addition to possibly winning an impressive prize, which can be used to develop the project, you will meet serious people in your industry.
Companies that conduct hackathons, obviously, are interested in additional products, if your project will appeal to them, you have a serious chance to attract as an investor the organizers of the hackathon, as it was with three teams at once at the hackathon “Assemble University”. You can see a list of upcoming hackathons here.
If a hackathon does not suit you, then nothing prevents you from approaching the investor directly, because thanks to the documents that you have already prepared, you know how much investment you need (although this point is exactly what will be discussed).
Where to find investment for your startup
1.
If your product can definitely be referred to “something tech” (medical technology, financial technology and so on) and it solves some understandable problem, then pay attention to big companies in your sector, many of them have their own investment solutions. For example, QIWI has a separate platform through which you can apply to the company with a request for investment.
- Peeking at your neighbors
If you have prepared your project presentation thoroughly and carefully, you probably know all the competitive startups in your industry. Deal information is a big infomercial that very rarely gets hidden. You can check online to see if your competitors have received investments in the last year, and if so, from whom. Feel free to apply to funds that have invested in projects similar to yours: this means that the fund is already working with your topic, understands something about it and will be able to evaluate your project for subsequent investment.
- contacting directly
The simplest and most obvious advice, which for some reason no one uses: just write to the investment funds. The website Firrma has a rating of the most active (that is, those who conducted the most transactions) venture capital funds for the year. There are both seed and new funds. The algorithm in this case is as follows: you need to go to the website of the investment fund, try to find a project presentation template there, fill it out and send it together with a cover letter to the address indicated on the website. Investment funds do read the letters that come to them. They make money on investments and certainly don’t want to miss out on interesting options.
I highly recommend finding a specific fund presentation template and working with it, because you will be asked to provide information in standard form anyway, and you will just lose time and some credibility if you don’t use a document that is in the public domain.
Contests
One format for going out to invest is startup contests. More often than not, an investment fund and some large firm come together to organize them, and the winners receive prizes from both: in the form of investment, in the form of firm services, or both. For example, the First Heights contest is run jointly by consulting giant McKinsey & Company and large investment fund Winter Capital. But the most famous startup competition in Russia is GenerationS. Apart from the main contest it has different nominations each year, the application and peer review process for them may be easier, so check if there is a special nomination on the subject of your project this year, and if so, feel free to apply on the site (the list of special nominations is at the bottom of the main page).
Separately, pay attention to contests stimulating the development of female entrepreneurship. For example, the famous jewelry house Cartier has a competition program for women business leaders from around the world.
By the way, not only Cartier has some women’s acceleration and investment projects. Pink has already written about special opportunities in IT for women.
Choosing an investor for a startup
Important and responsible business. Because an investor not only gives you money, he also gives you connections and opportunities to make the money even more money.
In addition, investment money is not given for free – you can get it only in exchange for a share in the company. That is, letting another participant into your project, whose interests will certainly be solely commercial, you must be prepared for the fact that your actions as the project manager must take into account the possible benefits for the investor.
This is the main difference between investments and loans: the loan can simply be repaid and forgotten, and the investor will stay with you until he himself leaves the project (sells his share). So if your project involves a conditionally simple development cycle and does not require a lot of funds, it will probably be easier and faster to take a loan for business development, and then to attract larger investments for scaling the project.