About "nedostartapers", "nedoinvestors"...
...and how to get rid of the prefix "nedo"
Andrey Stadnik, BFM Group Ukraine
Sheep of different productivity directions are sheared at certain times.
Sheep with uniform wool are sheared once a year – in spring,
with mixed wool twice – in spring and autumn.
M.F. Ivanov, "Sheep breeding", 1925Having visited any of the numerous free classifieds sites or business forums, in the "investor search" section you will surely come across an abundance of ridiculous "investment proposals".
Ridiculous – both in the form of submission, meaning, and in the abundance of errors.
Here are typical examples from several bulletin boards collected in 15 minutes of viewing them (spelling, grammar and vocabulary are preserved):
- I am looking for a business partner to fulfill a business plan. All the details in the correspondence. If you are interested in the offer, leave your email addresses.
- I am a businessman and entrepreneur. At his leisure, he invented a business project and a new transportation system, "Linear network transportation of passengers" according to my calculations, monthly income wakes up from $ 1,000,000. I will sell on the terms of the following employment for work. I suggest you take part in my investment project
- I am looking for an investor in a highly profitable business. I will provide a business plan and detailed financial calculations after a preliminary interview with a potential partner....
- I offer a recipe for the preparation of the "elixir of youth" – know-how in the field of slowing down the aging process of the body, as well as stimulating the activity of vital mechanisms and organs of the body. Investors are being sought. Complete studies and trials of the drug (on mammals) are needed.
- My name is Gerasim Izmailov. I have 300 inventions. Give 500,000 dollars to create working prototypes…
The same, or similar, offers come to my e-mail by the dozens every day. Few people look at the fact that BFM Group is not fundamentally engaged in investment brokerage. We saw the word "investment" in the context, so we need to send it.
There are, of course, competent offers, but they are lost against the background of hundreds of others that immediately go to the basket.
For a long time working in the investment market and regular clashes with such figures, I have developed common types of inadequate startups:
- Half-crazed inventors of something with a prototype made of wood, a doorbell and a battery attached to it, showering investors with the idea of a breakthrough in nanotechnology. An option is a piece of paper on which some kind of scheme is drawn by hand, in which they clearly see a super idea for getting a billion dollars.
- Narcissistic amateurs (I have a cool project – give me money, I'll tell you the details).
- Yesterday's and today's teenagers with micro-projects, the same fast-food education and no experience.
- Creators are dreamers who do not recognize plans, budgets, reporting, accounting, administrative and managerial functions. They are the Creators. And you are just an investor. So you mess around, wiping their snot.
- Losers, idlers, marginals with ideas – either stolen, or unprocessed, or unviable, or naively calculated to sell them to an investor and escape with money.
- It seems like normal projects in the form of a working business, where the owner is interested in attracting a strategic investor for further development. After lengthy negotiations and a comprehensive audit, it turns out that there is a huge debt payable, the real estate assets on the balance sheet were put into operation illegally, the validity period of the contract for the land plot is coming to an end and cannot be extended, and there is an unsolvable conflict of interests with other co-founders.
Admittedly, there are also real startups with a good team of specialists, deep pre-investment research and high growth potential. Unfortunately, they are, at best, no more than 5% of the total mass.
The pieces of paper with which startups come to investorsAs for whether the owners of start-up projects have a business plan, in 95% of cases, more or less serious research is not conducted.
There are no marketing and technological developments as such. The financial plan is presented in the form of a four-line tablet.
Very often we have to meet business plans in which two to three months pass from the moment of making a decision on the allotment of a land plot until the launch of a large plant into operation.
Transportation and storage costs are ignored due to the fact that they are not even suspected.
No one wants to think about the seasonality of sales and planned production stops at the planning stage.
Raw materials are purchased as needed, and payments for the goods sold come in an endless stream as the conveyor works.
The startup wants everything in his project to be like in a fairy tale. Waved his sleeve – and there is a huge factory. He pulled a hair out of his beard – and his goods flew through the air to the stores, happily making an advance payment.
The problem is global, and its origins lie in several things.
Firstly, there is a general habit that the banking credit system has a formal approach to the justification of financing. First of all, a liquid collateral and a credit history are required, and the business plan is attached solely for form.
Secondly, professional investment analysts are rarely found in banks who are able to see marketing, management and technological aspects of business through forecast financial indicators. Accordingly, no one can tell a potential borrower about his mistakes.
Thirdly, the general limitations and lack of education of many startups. Hence the fact that the Internet is full of "ready-made business plans", in which both the financial model and the summarizing indicators are based on some hypothetical, it is not known where they came from, source data.
About the "wolves"The network has the same huge number of pseudo-investors.
Pseudo – for the reason that they have the same attitude to investors as Zhiguli beer to the Zhiguli car.
- Small shopkeepers trying to prove to themselves that everything is so cool with them that it's time to diversify their business, and puffing out their cheeks, consider other people's investment proposals. In fact, they have never had money, no, and will not. To amuse their ego, they will ask petty questions that seem significant to them for a long time. After multiple meetings and negotiations, they approve everything beforehand, then delay the decision as much as possible, and when finally their phone still answers, they declare that they are not interested in the project because the shop business is closer to them.
- The winners of the dad's award and citizens who have successfully sold an extra apartment or 2 hectares of land inherited from the soldering. These are the great managers of all times and peoples. They suffer from overestimation of their capabilities and believe that if they invest in someone's start-up, the cost of which does not actually exceed the cost of a three-room apartment, it gives them absolute carte blanche for absolute ownership of both the project and its team.
As a rule, their money is random, they don't know what to do with it, and such projects fail before they even reach the break-even point. Moreover, they fall not because of a startup, but because of the idiotic initiatives of such would-be investors. - Thieves of ideas. This species of Homo sapiens is fine. Owners of established companies with a crisis of the genre in terms of the ability to generate ideas.
Yes, they have the experience and financial capabilities. But there is also pathological greed, coupled with a sense of self-importance. As a result, the more information they receive from the startup, the easier it will be for them to implement this idea on their own. - Scammers and scammers. As a rule, they are represented by investment brokers, consultants, intermediaries. They demand to pay for any pre-investment services (study of an existing business plan or investment memorandum, legal services, notarization, due diligence, incomprehensible certification of unknown things, risk insurance, payment for the arrival of a hypothetical investor, etc.).
You should know a simple thing. Any conditions set for prepayment are a divorce. - Forums of "business angels". The main condition is a fee for the opportunity to present your project to an audience consisting of people whose business cards the startup will never see, and the names will not know. If the continuation of the conversation follows, then the characters described above are more likely to be "investors".
The entire online investment market is 95% a huge crowd of charlatans and losers who have one goal: to sell something to one another.
At the same time, both adequate investors and normal startups spit out of disgust at the sight of this sandbox and become even more cautious in choosing strategic partners.
How it really happensThere are more than enough competent, well-reputed investors on the market who have successfully implemented more than one project.
They, as a rule, have clear proven legal schemes of interaction with project owners, in which both parties are equally protected. But they rarely post proposals like "investor offers financing" on boards and forums. Occasionally, their ads and direct contacts slip through on the Internet.
It is much more efficient to get information about potential investors from other sources. These are news sites, press releases, analytical materials, the use of social networks (Facebook, Linkedin), off-line contacts.
To be continued.Portal "Eternal youth" http://vechnayamolodost.ru