Young Innovator Course
The ABC of Venture Financingi-Russia together with the Zvorykin Project presents recommendations on attracting venture investments in youth innovation projects.
Introduction Venture financing is becoming more and more accessible in our country, and the number of projects that have received funding is more than one hundred.
A lot of companies have entered the market that should owe their appearance to such a phenomenon as venture financing. Now we can safely say that working with venture investors has ceased to be something abstract and has turned into a normal stage in the development of every innovative company.
In addition to private investors, government agencies have also become noticeably more active, which have begun to play a very prominent role in financing various projects. But working with investors has been, is and always will be a very complex process that requires a certain amount of knowledge about existing approaches, the ability to present your project favorably, as well as the willingness to work with full dedication.
This manual is intended for young entrepreneurs seeking to attract venture capital investments for their projects. The manual contains information concerning the initial acquaintance with the investor, the level of readiness of the project to receive venture investments and the cycle of attracting these investments.
The manual contains sections that describe how venture financing of youth innovation projects should develop. We offer you to familiarize yourself with the recommendations provided, intended for specialists of federal and regional structures who are responsible for supporting youth entrepreneurship.
The state supports innovation General characteristics
There are several main ways of state support for youth innovation projects:
1. Financing through investment funds, the main specialization of which is venture investments.
2. Mass events (for example, an Innovation Convention), which are aimed at preparing a young entrepreneurial community, as well as introducing entrepreneurs to potential investors.
3. The establishment of subsidies and grants (usually these are relatively small investments within one million rubles, which are designed to give an impetus to a start-up project).
Basically, the first way is the internal process of the investment market. An entrepreneur does not need to contact government agencies directly, because the funds of these investment funds are managed by private companies.
Vivid examples of such funds are the funds that a Russian venture company created in 2008, as well as regional funds that provide venture financing to small enterprises in the scientific and technical sphere. As a rule, public funds in this case are mixed in investment funds with private capital, and all decisions on investing these funds are within the competence of the management company.
Most of these companies are included in the review of funds whose main activity is venture capital investments. The exception to the rule is the Seed Investment Fund of a Russian Venture Company (RVC) - in its case, the investments are determined by the RVC itself.
The second way does not lead to the fact that you receive venture investments (but even in this case there are exceptions), but it is still quite an interesting and very important step towards launching your own innovative project.
By attending an event dedicated to innovation, the author of the project can: - meet and personally communicate with investors;
- participate in seminars that will help you learn how to attract venture capital investments;
- be able to get an independent evaluation of your project;
- get assistance in preparing a package of documents intended for the investor (mainly this assistance is organizational in nature: recommendations, planning and evaluation).
The third way of state support is that the entrepreneur is allocated funds for his project. In most cases, we are talking about certain forms of gratuitous assistance. In some cases, this financing takes the form of a concessional loan.
The main forms of support are:
- Provision of subsidies and grants of a monetary nature. As a rule, the amount of these benefits is in the range of 500 thousand – 1 million rubles, less often it is 2-3 million rubles. As a rule, these funds are provided for a very limited set of purposes (purchase of equipment, patent work, rent, etc.). But these funds can be issued without strict restrictions on the way they are used: the recipient of the grant can simply cover the budget of his project.
- Providing infrastructure to a young entrepreneur at a discounted price or completely free of charge. This mainly concerns the provision of office space in business centers at prices that are significantly lower than the average market. There are specialized business centers whose work is connected with small innovative companies. For example, this is how the Strogino technopark works, where offices are provided to start-up companies at a price that is twice lower than the market price. Similar centers exist at some universities.
Private venture investments in a certain sense lose out to this method of financing, because grants and subsidies are given to entrepreneurs free of charge. The grantee should not return these funds in the future, like a loan, and the grantee does not claim a share in the business, like structures whose main specialization is venture financing. On the other hand, grants have their drawbacks:
- a grant is a relatively small amount, which is unlikely to be enough for a full–fledged launch of an innovative project;
- when receiving funding, it is necessary to do a lot of paperwork, and subsequently report on the use of the funds received. The volume of this work is too large for the insignificant amount that an innovative project receives.
About some key programs of the Fund for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical SphereIn fact, this fund is the main state structure that finances innovative projects at the initial stage.
The Government of the Russian Federation has established that 1.5% of all federal budget funds allocated for science are allocated to this Fund (last year it was 2.5 billion rubles). At the moment, the Fund is engaged in the implementation of several programs that involve the financing of innovative projects:
- Start. This program is designed for 3 years. In the first year, R&D is funded, which opens the way to the market for the company. The company enters the market independently or by attracting extra-budgetary financing. The total budget of the Fund per project is 6 million rubles: 1 million for the first year, 2 million for the second and 3 million for the third year.
- U.M.N.I.K. In the course of the project, young scientists who seek to be realized in the innovative field are identified. The project is aimed at encouraging young people to participate massively in innovative and scientific and technical activities through financial (including venture financing) and organizational support for innovative projects. The Foundation annually allocates 200 thousand rubles annually to each winner of the program.
- Development. The framework of this program involves the holding of a competition "Performance of research and development work aimed at creating export-oriented products."
- Inter. This competition is held by the Foundation for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical Sphere jointly with the Federal Agency for the Management of Special Economic Zones for Small Enterprises that are residents of special economic zones of technoparks and technical innovation type.
- Bid. As part of this program, a part of the interest rate of a bank loan is compensated, as well as leasing payments of those small enterprises that implement R&D projects.
- Temp. The program is primarily intended for those enterprises that see the acquisition of licenses for technical solutions and new technologies from Russian universities as the main tool for their rapid development. Participation in this program can only be taken by those enterprises that already have quite serious sales volumes of their products (at least 30 million rubles a year) and who buy licenses in order to significantly increase these volumes.
- Start. Within the framework of this program, innovative projects are funded, which are carried out by small innovative companies based on developments and with the support of personnel from Russian universities.
Details of the programs are set out on the foundation's website.Russian Venture Capital Company
Venture investments of this company are not limited to investments in venture funds that are managed by private companies.
RVC has its own fund of so-called seed financing.
RVC's venture investments are managed in full compliance with certain rules, according to which all the Fund's funds are invested exclusively in innovative companies. The activities of these companies should correspond to the priority areas of development of Russian science, technology and technology, or produce products that are presented in the List of critical Technologies of the Russian Federation. The company can also count on venture financing if its activities are in full compliance with the Investment Declaration (Memorandum).
It is impossible to apply for venture investments by submitting an application directly to RVC. Venture investments will be provided only to those projects that are represented by the Fund's venture partners who have been registered in accordance with the provisions of the Regulations on the System of Venture Partners of the RVC Seed Investment Fund and the procedure for their registration. To put it simply, they are consulting companies that have the necessary level of accreditation. However, the decision on the financing of a project remains with RVC.
The Fund is ready to provide no more than 75% of the total investment needs of an innovative company at the first stage of financing. Venture investments in this case will not exceed the amount of 25 million rubles.
When choosing an innovative company , the Fund is guided by the following criteria:
- the potential of an innovative company for significant growth;
- an innovative company must fully comply with such a document of the Fund as an Investment Declaration;
- high level of qualification of project participants;
- the company's ownership structure should be as transparent as possible.
The Zvorykinsky Project is a special program of Rosmolodezh, which is designed to support youth entrepreneurship.
The web resource of the program is located here.
Among the main goals of the program, it should be noted that young talents have the opportunity to realize their scientific potential in Russia, to achieve success and wealth through the commercialization of their projects.
The Zvorykinsky Project offers free courses for participants, which take into account the specifics of innovation activities. These courses include the following areas:
- marketing of innovative products;
- management of innovative projects;
- financing of innovative activities;
- commercialization of the results obtained in the course of scientific and technical activities;
- the art of presenting an innovative project.
The most important activities of the project are: - Innovative change of the forum "Seliger-2010".
The Government of the Russian Federation has identified Seliger as a system platform for the selection, development and support of talented youth on the way to creating competitive products and services, as well as public and civic projects. The Forum is about recreation, sports, education, tourism, creativity and meetings with interesting people.
- Zvorykin Prize. The subject of the competition is the selection and encouragement of talented young people for achieving high results in the development and promotion of innovative projects.
- The Russian Youth Innovation Convention, which is an annual systemic all-Russian event. It is attended by young inventors from Russia, entrepreneurs, innovative managers, scientists, representatives of domestic and foreign companies that use innovative developments and provide venture investments.
- Interregional innovation conventions. At the regional rounds, projects are selected, which are subsequently included in the competition program of the district conventions, which are analogues of the federal Convention.
- Days of Russian innovations. The purpose of this Forum is to create an international communication platform for discussion, during which methods of forming the Russian innovation system are discussed with the joint participation of the authorities, business representatives, the innovative Russian community and the scientific and technological Russian diaspora abroad. The forum is designed to demonstrate the state of the Russian innovation system and make sure that top officials of the state pay attention to innovations.
The project website provides all the necessary information.Russian Venture Fair
The Russian Venture Fair is Russia's largest contact platform designed for professionals in the venture and direct investment industry, as well as managers and owners of medium and small businesses that are directly related to the sector of technological innovation.
The first Russian venture Fair was held in the winter of 2000 at the Moscow State University Science Park. It was then that Russia demonstrated for the first time a similar approach to attracting investment in business, which is based on scientific developments. Then about 200 participants responded to participate in this event. Since 2005, the Russian Venture Fair has been held in cooperation with the Russian Venture Forum, which is a congress block that develops venture financing and investment infrastructure on a national scale.
Today, both the Fair and the Forum are already international events. Every year, domestic and foreign professionals take part in the Fair and Forum, for whom venture investments have long become the main activity. Among the participants are partners and managers of the largest foreign and domestic venture funds, as well as funds that are engaged in direct investment, top managers of leading banks and investment companies, heads of financial structures, representatives of international corporations, partners and directors of foreign and Russian exchanges.
Within the framework of the program, such topics as direct and venture financing, pressing issues and common problems, the development of effective development strategies, finding new customers and partners, laying the foundation for the development of an effective business in the future are discussed during round tables and interactive discussions.
Main discussion topics: - direct and venture investments – the main market trends;
- the strategy of the activity of funds whose main activity is venture financing (mainly, the possibilities of activity in the new economic conditions and access to capital in crisis conditions are discussed);
- partnership between the private sector and the state: venture investments of a non-private nature and state participation in the development of promising innovative companies;
- prospects and trends in the development of the innovative economic sector.
The presented program is an example of a regional-level program aimed at the development of small business and innovation.
Programs that resemble Moscow's to one degree or another exist in almost all regions of the Russian Federation.
Financial support for representatives of small business in the capital is provided by the Moscow authorities: the Moscow Department of Support and Development of Small Business, the Moscow Government Commission on Financial and Property Support for Small Business, as well as organizations that are part of the small business support infrastructure. First of all, these are organizations such as the Moscow Small Business Support Center, the Moscow Leasing Company and the Business Development Centers of the Moscow Administrative Districts.
Venture financing, as well as the provision of funds from the budget for projects that provide support for small businesses, are carried out in the following forms:
- subsidies to legal entities and individuals;
- payment for works, goods and services performed by individuals and legal entities under municipal and state contracts.
In 2008, the total amount of confirmed capital managed by venture funds was about 165 billion rubles.
However, it is necessary to take into account the fact that the size of investment funds is disclosed mainly by those companies that invest in sufficiently mature business projects, that is, those projects that are usually attributed to the 2nd and 3rd groups. Business angels prefer not to disclose the amount of their investment resources. That is why it would be much more correct to estimate the size of funds that provide venture investments in two groups.
Under the management of venture funds of the so-called late stage (stage 3) there are funds in the amount of 100 billion rubles or more. As for the expert assessment of the amount of funds, it amounts to 150-200 billion rubles. It should also be noted that these funds are at the intersection of such concepts as venture financing and direct investments in mature companies.
The early stage of venture funds (1st and 2nd stages) was announced the management of funds, the amount of which is about 60 billion rubles. No more than 30% of funds at this stage disclose information about the amounts they have to operate with. If we turn to the general expert assessment, early-stage venture investments are at the level of 100-150 billion rubles.
The number of funds whose main specialization is early-stage venture investments exceeds the number of late-stage funds by 5 or 6 times, which is a reflection of the overall ratio in the market of projects that belong to different stages.
About a fifth of all funds that operate on the Russian market are created with the participation of the state capital, or are based entirely on state budget funds.
The characteristic features of funds that have been operating on the market in recent years are the following:
- Private funds invest in the Internet (about 70% of all projects that have received venture investments). Public funds are mainly focused on technical innovations.
- For the most part, funds are indifferent to the territorial affiliation of a particular project (with the exception of only regional funds).
- Venture financing today is characterized by the appearance of participants (in fact, these are business angels or private venture investors) who have not dealt with investments of this nature before. For example, certain investment resources have flowed into the venture financing market from the construction industry, which is currently going through a stage of deep crisis.
Useful recommendations to project authorsThis section contains information that may be useful for an entrepreneur in the process of finding an investment and in communicating with a potential investor.
Project readiness for investmentInvestors, as a rule, impose on innovative companies or projects a set of those requirements that can be called standard.
Funds that provide venture financing, depending on their preferences and direction, may make a variety of requirements regarding the ways of presenting projects, the stage of their development and legal status. But all funds want to see the qualities listed below in the project. You need to try to put yourself in the place of a potential investor and assess how fully you have conveyed in your presentation materials the information that is voiced in this list.
1. An exciting idea
Every aspiring entrepreneur believes that it is his idea that is the most successful and extraordinary. The truth is that only a small part of business plans contain unique ideas. Most often, the funds responsible for venture investments meet with the same idea, but only in its different manifestations. When does an idea become really exciting?
In the case when the author of the project clearly sees the problem and knows how gracefully it can be solved. This can be considered a starting point in the process that involves venture financing of your project by one or another fund. However, one idea is not able to make your project attractive in terms of investment. In order to receive venture capital investments, it is necessary that your project has other ingredients, which are described below.
2. The team
Even the presence of a brilliant idea in the absence of a core of a highly qualified team is unlikely to interest potential investors in investing in your project. This does not mean that you should recruit exclusively world-class specialists to your team. But if necessary, you just have to be able to attract key specialists. Even if you are the most determined entrepreneur on the planet, who, alas, does not have his own team, you are unlikely to interest investors.
If you cannot convince at least someone that your project is really worth the time, effort and money spent on it, you are unlikely to be able to convince the investor of this. You should always remember that you will be able to count on venture investments only if your communication skills with people are at the proper level.
3. The possibility of market expansion
Venture investments are primarily focused on the business that is able to create a competitive advantage, as well as ensure growth due to its advantages over representatives of the competing camp. If your specialization is technology, then it is best for you to target the sector that is not currently crowded.
To the economic sector, which is characterized by any problems that need to be solved, and opportunities that have not yet been opened by other entrepreneurs. In this case, your solutions will be able to provide a decent competitive advantage. Many believe that the whole point lies precisely in how huge the market is. But what really matters is what competitive advantages you are able to create in this market. The most successful companies are engaged in creating new markets, and not vice versa.
4. Technology
What brings the success of technology? The correct answer is that there are a huge number of customers who have the necessary money and who are in dire need of your technology. If your project has technological advantages today, then how are you going to support them tomorrow? Having a patent will not be enough, especially if we are talking about our country. To at least have a chance to get venture capital investments, you need to convince a potential investor that both you and your partners have all the necessary qualities and talents to be on top of success for a long enough time.
5. Competitive advantages
Any successful business has to operate in a competitive environment. But competition is not only your direct business competitors, it can also be those who have, albeit not so brilliant, but definitely simpler solutions. You need to make it clear to the investor that you know how to win the favor of target consumers, while bypassing all competitors.
6. Financial plan
If you feel disgusted at the thought of having to draw up a financial plan and think that this is just a waste of time, then you need to immediately abandon the idea of getting venture investments from someone. Competent financial planning can prove to investors that you clearly understand the economics of your own project. The financial plan speaks about your idea in the language of numbers – what can ensure growth, what will bring profit and what will be the development of your company in the near future.
7. Confirmation
This factor is of the greatest interest to a potential investor. What are your conclusions based on? What proves that the consumer will be interested in your product? Are the experts who work in your field ready to confirm all your conclusions? Do you have partners who are experts in the implementation of your project? Are there any prior arrangements with the target buyer of your product? Are they buying your product now? The more experts and target buyers support you, the easier it will be for you to convince potential investors of the effectiveness of your project.
Investor search and selectionOur recommendations contain contacts of many venture funds that operate in the territory of the Russian Federation.
If this list is supplemented with contacts of those investors who do not provide venture investments on a regular basis, then this list of available investment sources will grow to several hundred. But, despite such a wide choice, entrepreneurs still have the following key problems:
- How do you determine which fund you need to apply to?
- How do I start communicating with this foundation?
When choosing a fund that is ready to provide you with venture investments, it is necessary to take into account not only his preferences (how well you are suitable for an investor), but also yours (whether you agree to work on the proposed terms). Before applying to one or another investment fund, it is necessary to get answers to some questions.
As a rule, the differences in the approaches of funds are as follows:1. Project development stage
For any stage, you can find sources of capital, starting from "seed financing" (an entrepreneur has only a good idea or technology) and ending with the growth stage, when the company already has millions of turnover. But you only need to apply to funds specializing in those stages of financing that are specific to your particular project. That is why, if your company has just been created and it needs the first 100 thousand dollars, then you need to contact the fund that is engaged in financing this stage of projects. The choice of funds for projects of other stages is similar.
2. Industry and formal compliance
Many funds have limitations related to the types of companies that need investments. As a rule, these restrictions are related to:
- industries;
- region;
- the presence of a legal entity and the legal protection of intellectual property;
- the age of the company (this criterion can be found in state programs to support entrepreneurship).
Usually, if the fund does not specify any special restrictions, it means that it is ready to invest money in any projects. But if there are such restrictions, then it is necessary to focus on working only with those investment funds whose restrictions will not interfere with work.
3. Form of financing
Services are always much easier to get than money. Therefore, in a project that involves significant costs for rent, legal and financial services, office infrastructure, the most attractive are those investors who work on the principle of a business incubator. In other words, these are the funds that not only finance the project, but also allocate the necessary infrastructure for its development. It is necessary to choose these funds because they significantly increase the probability of successful financing.
4. Profitability of the project
Investors who provide venture financing take quite a big risk, so they try to invest exclusively in those projects that can bring high income in the future. As a rule, investors formulate their requirements in terms of the increase in the value of your business (a typical expectation is a tenfold increase in value over three years), or in terms of the internal expected rate of return (investor requirements most often relate to the IRR of the funded project being above 35-50% per annum). In addition, the requirements for the profitability of the project increase if the project is immature.
If the profitability of your project does not meet the above requirements, then, most likely, it is better for you to contact state funds that support start-up entrepreneurs free of charge (subsidies and grants). A low-yield project is unlikely to interest a traditional investor.
5. Investor Participation
Different investors have different attitudes to the management of a company that has received venture capital investments. Do not forget that investors become co-owners of your business and get the right to participate in the management of the created company. When choosing investors, you need to take into account your preferences – it will be comfortable to work only on those conditions that completely suit you.
It should be noted that each of the approaches has its pros and cons. Arguments in favor of active intervention of investors in the fate of the company: - you can count on the experience and connections of the investor;
- an investor can organize the company's finances, legal support, and work with staff at a qualitatively new level.
Arguments against active investor intervention: - you may lose a single control center, and as a result, the company will lose mobility;
- unfriendly actions on the part of an investor who wants to withdraw income or assets from the business are not excluded.
In the end, an entrepreneur should choose the investor with whom he will quickly find a common language, and their views on business management will completely coincide. Otherwise, it will be very difficult to avoid conflict situations that will have a devastating effect on the company's work.
6. Investor Stability
It should be taken into account that investors do not always contribute the funds provided for by the project overnight. This is especially true in situations where a certain part of the investment is expressed in the provision of services. In this case, it is best for the entrepreneur to assess the possibility of termination of project financing, and how much the business depends on such an event.
If we are talking about an institutional investor (fund), then the probability that venture financing will stop is quite small. But as for private investors and business angels, the probability of such an outcome is much higher.
How to start communicating with foundations?This issue is discussed in detail in the section entitled "Procedure for communicating with an investor".
Business planIf you are going to communicate with a person or structure that will provide you with venture financing, you need to have a competent business plan that needs to be drawn up taking into account all the preferences of venture investment funds.
It is advisable to familiarize yourself with these preferences in advance on the virtual platforms of these funds. Below is the structure, adhering to which, you can solve all business planning issues.
Business plan: main sections1. A brief presentation of a project or company includes: company name, legal and actual address, full name, position held by a contact person, phone number, fax number, website address, email address, shares of shareholders or participants in tabular form.
If your company is not registered yet, this is not a reason to neglect this section. You should write your thoughts on how and when you plan to register the company and what assets to transfer to it. If the company already exists, then it would not be superfluous to give a summary of its history, list the company's services and products, its assets, indicate profits and sales, as well as the number of employees working in the company.
It is also necessary to give a description of the distinctive features of your company and indicate what position it occupies in the market at the moment. Previous funding rounds, if any, should also be mentioned in this section. And it is in this section that you should outline strategic goals and give clear instructions on how to achieve them.
The volume of this section is 1-2 pages.
2. In this section, the author of the project should outline the problem that a new technology or product can solve. It should also briefly describe ways to solve this problem.
The volume should not be more than 1 page.
3. If you need venture capital investments, it means that you must professionally present the business idea of the project. Here it is necessary to describe the ways of generating income. Demonstrate how the new business will generate profit and cash flow.
The volume of the section is 1-2 pages.
4. This section briefly describes the scientific and technological foundation of the project. It is also necessary to describe at what level of development the technologies in the field of the declared project are now. Demonstrate the uniqueness of your product/service/technology and name the patents issued and applications filed. There is no need to be afraid to name technical details – they will be studied by professionals in the field to which your proposed solution is relevant. If there is no new technology in the project, then you should give a description of those characteristics that, in your opinion, are the key competitive advantages of the project.
The volume of the section is 1-2 pages.
5. Briefly describe and characterize the product or service planned for production. In this description, it is necessary to address the issue of intended or existing consumer properties, describe the differences from replacement products and analogues, as well as analyze consumer value.
The volume of the section is 2-3 pages.
6. Briefly describe the state of the market for which the product/service/technology being developed is intended at the moment. A description of the target audience should be given. Demonstrate why a particular category of consumers should become your customers. Give a description of the competitive background and name the competing products and firms. It is also necessary to make assumptions about the planned sales, justifying them.
The volume of this section is 2-3 pages.
7. In this section, specify the data on the qualifications of your team members (1 page per person, which will contain information about the status, experience in this matter, a list of achievements and works of each team member, the role in the project that this or that employee is supposed to play, etc.).
8. Describes the structure of costs that are associated with the completion of your product or service, with obtaining a patent and other similar measures, with the creation of a production base at the start, with the launch of products into production and with the beginning of the promotion of your product / service to the market.
The volume of the section does not exceed 2-3 pages.
9. This section describes the assumptions regarding the implementation of the product/service. Give a description of the economic parameters included in the forecasts.
The volume is 1 page.
10. Making a financial forecast of the activities of your project or company. This forecast should include a plan of when and in what volumes venture investments should be provided. It is also necessary to give a description of the forecast budget for the movement of monetary assets. If there is such an opportunity, then it is necessary to add a loss and profit statement with explanatory graphs to this calculation.
The volume of this section is 2-3 pages.
12. In this section, you should evaluate the effectiveness of the project by describing the investment efficiency. This can be done in the form of calculating performance indicators (IRR) or a simple business assessment. Here you can make an offer to the investor about the volume of venture investments, participation shares in the fund's project, and so on. All this needs to be justified in an understandable language of numbers.
The volume of the section is 1 page.
The above structure clearly shows that the business plan should not exceed 25 pages in its volume. The optimal document is a document with a number of pages that does not exceed 12-15.
Additional appendices can be added to the main text of the business plan, which must be provided to the investor at his first request. These applications must contain:
- legal documentation of the company;
- financial statements;
- detailed technological information about the product or service;
- reviews of specialists and experts;
- fragments of project descriptions that are confidential and that should not be disclosed at the first acquaintance.
As for the last point, you need to be extremely careful here. Funds providing venture financing are wary of the excessive shroud of secrecy enveloping the project. Therefore, it is necessary to call confidential only those data, the possession of which can really give competitive advantages.
You will also need another abbreviated description of the project, which is called "Summary" or "Short investment proposal". The volume of this document should not exceed 1-2 pages, which briefly outlines the essence of your business plan. One version of such a resume should be prepared in advance, but in the future, in cooperation with different funds providing venture financing, you will need different resumes that will take into account the preferences of a particular investor.
The procedure of communication with the investorIf you want to attract venture capital investments, then your first step should be to get in touch with the investor to whom you want to offer the project.
It should be taken into account that there are so-called institutional investors (professionals in this field) in the market, whose preferences and coordinates are known in advance. But there are also a large number of private investors who are in search of new projects, just as you are in search of those who will provide you with venture financing.
With this in mind, it makes sense to act in several directions at once.
Direction 1. Higher education institutions and state programs
It is necessary to participate in several events that are directly related to youth entrepreneurship. At such events, there is a chance to meet an investor who does not publicly advertise his activities.
But the most important thing is that at such an event you will be able to more accurately understand the subtleties of your work, evaluate your capabilities and plan activities, as well as try your own hand at presenting a new project. To begin with, you can take part in one of the many state programs that are described in the Recommendations above.
It is worth further studying the projects and the 34 programs that universities offer. You can participate in the programs of those universities with which the project participants are associated. As a rule, universities offer programs for their students that resemble federal ones, but at the same time these programs are much more flexible.
Direction 2. The Internet
Information about your project should be posted on websites whose main topic is venture financing. The project should be promoted in the community of such web resources. do not think that you will immediately receive financing, because it is quite difficult to attract venture investments in this way. But such a possibility still exists. Among other things, having worked with online and offline programs related to the support of youth entrepreneurship, you will gain valuable experience that will be useful to you in the future.
Direction 3. Consultants
More funds prefer to act not as investors, but as intermediaries who attract venture capital investments from a variety of sources. Our list of funds designates such structures with the letter "K". The work of these funds is based on the fact that they charge a certain percentage for their services in a new business if the issue of financing is resolved positively. As a rule, this is always a payment for the success that was achieved with their active assistance.
Direction 4. Funds
And finally, you should select from the list those funds that you find most suitable and contact them. However, you should not start the presentation of your project with funds. At first, it would be more correct to practice in other areas in order to gain experience in this activity. The number of funds that provide venture investments is limited, so you should not try to create a first impression on the second attempt. If you fail at the presentation, you will not be given a second chance in this fund.
The cycle of working with investorsAs an example, let's give the scheme of working with an investor described by the InVenture foundation, whose main specialization is venture financing.
"If you have ideas that you want to transform into a startup with the help of the InVenture foundation, send us a brief description of the essence of your project. In this letter, you must specify the following information: age, place of residence, education, place of work, experience in the field to which your project relates.
If we find your idea attractive and promising, we will arrange an offline meeting for you and tell you what steps you need to take next. At this stage, there is no need to send detailed business plans, presentations and other investments to the fund.
As a rule, after the first offline meeting, an official application is made in a certain form. The application will be considered by the founders and the Investment Council of the incubator. If the submitted application is approved, you, together with representatives of the InVenture foundation, will start developing a feasibility study. This document includes a project description, project architecture, production schedule, marketing and business plan. When the feasibility study is approved, the project will enter the development stage, which includes several stages.
The finished product must go through the stage of market launch. The duration of this stage is approximately 6-8 months. If in the first months the product demonstrates high demand and growth of the main indicators, then the project automatically enters the development stage.
This stage involves the creation of an autonomous enterprise, the financing of an advertising and marketing campaign, and the InVenture fund is considering the possibility of selling a stake in a new company to portfolio or strategic investors. At each stage, the Investment Board of the InVenture Fund may refuse to participate in the project. As a rule, this happens only if the futility of the project becomes more and more obvious in the process of work."
Portal "Eternal youth" http://vechnayamolodost.ru22.03.2011