How to find an investor for a new business

Starting and growing a business requires financial investments on a larger or smaller scale. Therefore, an important task associated with the creation of an enterprise will be the solution of the question of how to find an investor.

The main features of the search for an investor

When opening a business or expanding and developing an existing enterprise, the founder must take care of the availability of investments. A sufficient amount of money invested in an enterprise determines its future success and prospects.

Drawing up a business plan

If the founder of the company does not have sufficient capital to guarantee the development of the enterprise, it is necessary to turn to investors who are ready to invest their own financial resources. But in order to convince a potential investor that a business is promising and worthy of investment, you need to know what criteria determine the potential of a particular enterprise or business idea:

• company competitiveness;
• profit that the company can potentially receive;
• required amount;
• the period when the funds will be returned to the investor.

In order to interest a potential investor and convince him of the prospects of a future company, you need to draw up a business plan in which all financial aspects must be calculated.

To receive investments, it is necessary to create a special investment proposal, in which the founder of the company sets out both general information about the enterprise and its history, and a brief description of the products being created or the services provided. It is important to inform the future investor and the financial history of the company. In addition, the investment proposal must necessarily include a strategic plan, financial forecast and data on the necessary cash investments.

An additional advantage will be the provision in parallel with the investment proposal of letters of recommendation from employees, a list of suppliers and buyers, as well as a report on the current financial position of the company.

Form of cooperation with the investor

There are 3 main forms of cooperation between an investor and a business owner. Analyze in advance which of them will be more effective:

1. Interest on investments.
2. The percentage of profit during the operation of the enterprise.
3. Business share.

Having decided on an acceptable option, indicate it in the business plan. It is often difficult for a novice entrepreneur to find the necessary funds, therefore, if the investor does not agree with the chosen financing model and wants to use another option for cooperation, evaluate this option. Sometimes it is better to agree to the terms of the investor than to be left without financing.

Meeting with the investor and conclusion of the contract

Upon receipt of a positive response, it is not recommended to conclude an agreement immediately, it is better to wait for proposals from other investors. Before making an appointment, prepare information about the advantage of the enterprise over other companies of the same profile and why an investor should invest in it.

Important!

Investor's expectations at the first meeting come down to a competent presentation of the enterprise and business plan.

The final stage of negotiations comes down to the signing of an investment agreement. In the contract, it is important to prescribe the conditions and nuances of cooperation:

• terms;
• amount of investment;
• rights and obligations of the parties.

After that, the money is transferred to the entrepreneur on the terms specified in the contract. In this case, the funds must be invested strictly in the project.

Legal assistance in concluding an investment agreement

Sources of financing

It is important for businessmen to know possible sources of financing. These include:

• venture funds;
• banks;
• relatives and friends;
• business angels;
• institutional investors;
• crowdfunding.

If entrepreneurs are already familiar with investments from relatives and friends, as well as with existing banking programs, then other methods are new for most novice businessmen.

Venture funds

Venture capital funds are organizations that specialize in investing in startups. If the proposed project is promising, the fund allocates a significant amount for development.

Business angels

Business angels are individuals who agree to contribute a specific amount to the development of a business. In order to succeed in interacting with them, it is necessary to negotiate and be able to convince the prospects of the project.

Institutional Investors

If most of the listed methods of obtaining investments are more suitable for start-ups. For serious organizations that require large funds for development, institutional investors will be the best way out. These include:

• investment funds;
• pension funds;
• insurance organizations;
• credit unions.

This type of investor is ready to provide large amounts for a period of 5-10 years, but in return they require a guarantee of the company's profitability and the return of the funds taken.

Crowdfunding

Crowdfunding is collective lending, while the amount of investment from each lender may be different. To the extent possible, the lender provides some amount of money to individuals or organizations.

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Popular platforms for finding an investor

There are a large number of websites on the Internet that help with the search for an investor. Here are 5 popular sites:

1. Starttrack.ru – with the help of the project, investors find really interesting companies, and startups attract investments as quickly as possible.
2. Ventureclub.co is a private venture capital club.
3. Napartner.ru – search for investments and a team for start-up projects (startup), a website for financing business start-ups.
4. Mypio.ru is a collective investment in business and real estate.