Investors usually either sell their shares in a successful startup or keep them for a stable passive income. The parties agree on the division of profits in advance. At the same time, the share of the investor sometimes makes up a large part of the income, and the share of the creator does not exceed 10%.
To find a good project for investment, an investor needs to do some serious work. It includes not only searching for and obtaining information about startups, but also the formation of one’s own image in the eyes of the authors of ideas.
Five steps to building the right investment strategy:
- engage in networking and build trust in the startup community;
- make inquiries about the authors of projects, monitor their activities;
- learn to track trends and understand at what point and what idea can “shoot”;
- find experienced co-investors to invest in projects together;
- evaluate the project in which the investment went, at each stage of its development, in order to make a decision on further investments.
How to interest an investor
Before attracting investments, you need to determine for yourself the ultimate goal of financing and, depending on it, calculate the amount of investments, sources and timing of their receipt.
After that, you need to decide on investors. If it is not possible or not desirable to attract money from the inner circle, then it is necessary to draw up a list of suitable funds or business angels for the purposes of the project. Funds can be found in business media or specialized messenger channels. Investors can be contacted on LinkedIn, after preparing warm letters with the necessary information. You can also use acquaintances to achieve a personal meeting.
In personal communication with an investor, it is important to immediately interest him. This requires an attractive business plan, as well as a concise and visual presentation or pitch. Advantages over competitors and the uniqueness of your idea must be identified first. You also need to indicate clear material benefits and the expected result. For this, statistics based on the results of a prototype test or any other one that justifies the need for a given product or service are suitable.
Short pitch plan:
- description of the problem and its solution;
- project stage, metrics and achievements;
- business model;
- stages of development and what has already been done;
- market and competitors;
- investment proposal.
In order for the presentation to be successful, you need to learn how to speak the same language with the investor – briefly and succinctly. It is necessary to prepare for all possible objections on his part.