Start-up can be called the initial stage of business development. Most often this term is used in relation to IT projects. One of the key problems of startups is the lack of their own funds for the development of the project, which makes it especially important to attract external borrowings.
Who can invest in a start-up
The question of who can act as an investor for a start-up depends on its stage. So, if a project is only in the form of a concept or idea, at the so-called seed stage, then for serious investors it is hardly of interest.
Therefore, it remains for such startups to turn to a group called FFF (fools, friends, family) for help, which means fools, friends, family. If contacting them does not bring a positive result, you can only rely on your own strength and save up for your business yourself.
At the start-up stage (or later - the stage of growth or expansion), when the company is already functioning and its product is ready to enter the market, business angels or venture funds can come to the rescue.
Business angels are independent private investors who are investing in a business at the idea stage. They have greater autonomy in making financing decisions, are not afraid to invest in high-risk projects, and do not require being a founder member of the company. However, with their help it is possible to attract relatively small amounts - up to 300 thousand dollars. At the same time, they rarely invest large sums in one company, but seek to diversify the directions of investments.
Unlike business angels, venture capital funds do not manage their own money, but the funds of their investors. Therefore, they are more careful when choosing an investment object. They prefer to invest their clients' money in projects with a high degree of risk and high potential for profitability. At the same time, it is often about large sums - from 1-3 million dollars. As a rule, projects with investments of less than 500 thousand dollars are not interesting to them.
Where to look for an investor?
If everything is more or less clear about how to interest a family or a friend, then how to attract a business angel or a venture fund is a rather complicated question.
One of the most effective options is participation in various events (conferences, exhibitions) dedicated to innovations and start-ups and the presentation of your own project. It is also worth participating in various project competitions.
It is necessary to make your own website presentation of the project and actively promote it on the Internet. Start-up information can also be posted on numerous specialized portals and message boards dedicated to finding investors.
Another option that has become widespread in the world is called crowd investing. On such sites, money is attracted from non-professional investors who invest small amounts. They do not claim to have a serious return on their investment. In return, they can be offered a free sample of products, a souvenir, etc.
