How to attract investment in a startup
One of the most valuable skills in business is the ability to open it without investing your own money. Many entrepreneurs write a business plan and think about how to attract investment in a startup and not spend years on it.
In some cases, there are simply no native resources, and in some third-party capital is attracted to accelerate growth. At the start of the project, the money goes to the launch of the first sales and tests. In such cases, it is quite difficult to get a loan: due to the increased risks, banks are not sure that the debtor will return the money. In this case, the entrepreneur can only look for other options. About them – in this article.
Where to look for investments
So, if your project is at an early stage, then there are several different sources of funding.
FFF, meaning family, friends and fools
In the original, the phrase sounds like “family, friends, fools". A close circle of acquaintances can help and lend if they believe in your idea. Don’t forget about the risk of ruining the relationship and keep in mind that the debt must be repaid, no matter how close you are.
Contact a private investor. Often they finance startups in exchange for a stake in the company. He usually earns on the resale of his share in the later stages, that is, after the growth of the company. In some cases, the investor does not count on the growth of shares, but on a part of the company’s profits.
In other words, accelerators. They offer training programs for entrepreneurs, help them understand the market situation, and even find their first customers. It is important that they organize events where they introduce potential investors and partners.
Funding from the state or commercial organizations can be obtained by passing the competition. You will need to answer for the money received, that is, provide reports on how the money was spent. To receive a grant, you need to prepare a good business plan and apply for a competition.
Crowdfunding is a method of obtaining investments from a large number of individuals. They finance your startup, and in return you give them opportunities: for example, give free use of the service. In some cases, the one who invests acquires a stake in the company; in others, he simply receives a postcard.