An investor is needed to finance projects, enterprises or ideas with the aim of making a profit. They provide capital or resources in exchange for a share in the business, interest, dividends or other forms of income. The main functions of an investor include:
Providing funding for the development and expansion of the business.
Assisting in the implementation of new projects or innovations.
Sharing risks with entrepreneurs.
Receiving income in the form of profits, interest or dividends.
Supporting economic growth and job creation.
Thus, an investor plays an important role in stimulating economic activity and business development.
Before you start looking for an investor, it is important to determine what kind of investment you are interested in. This could be equity participation in a business, convertible loans, crowdfunding or other forms of investment. Defining the desired type of investment will help narrow the circle of potential investors and focus your efforts on the search.
Present your business plan and financial forecasts to the investor. The more detailed and clear the information about your future business, its potential and risks is presented, the more likely it is to interest the investor. It is important to demonstrate your competence and understanding of the area in which you plan to develop.
In order to find an investor, you need to actively look for him in the right places. There are specialized platforms for finding investors, investment funds, business communities and networking events where you can meet potential investors. It is also worth paying attention to business angels - individuals willing to invest in promising projects.
A proactive approach to finding an investor often yields the best results. Do not hesitate to share your business idea with others, participate in startup conferences and business competitions. The more widely you spread information about your project, the more likely you are to attract the attention of a potential investor.
Finding an investor to start a business from scratch is a difficult, but quite feasible process. It is necessary to clearly define the type of investment, actively search for potential investors and professionally present your business idea. The key points are competence, confidence and persistence. Remember that investors are interested not only in your product or service, but also in you as a professional and the head of the business project.
Before you start looking for an investor, you should decide on a couple of theoretical points. Knowing the investor's desires, you can understand how to look for him and what you need to give him. When looking for an investor, it is important to remember one detail: Investing implies making a profit. Every businessman who wants to interest a potential investor in his business should keep this rule in mind. No one will be interested in an "innovative breakthrough", "original idea", "new technologies" if they do not promise tangible profit. You need to speak to all investors in the language of money and risks. Only then can you really interest them.
To receive monetary investments, you need to convince the investor that his investments will be profitable;
You need to prove why your project is more interesting than that of direct competitors;
Show what prospects you have for further development in the market.
Investors who do this professionally can literally determine in 10 minutes whether a project will be profitable or not. And when they invest money in a business, they are not engaged in charity. The only motivation for investments is to get the fastest profit, which should be higher than not only the average bank deposit, but also the lion's share of competitors. It follows that the main task is not to find a private investor, but to interest him, convincing him to invest his money in your project.
You should not perceive an investor for a business as a creditor. He voluntarily invests his funds, and in case of failure, they will not return to him in any way. That is why for beginning entrepreneurs, an experienced investor will be a partner who can help in case of minor failures and share success. That is why you need to work not only for your own benefit, but also for your business partner. You invest your ideas, efforts, time, money (to a lesser extent), while the investor invests his money, participates in making important decisions for the company. This is a kind of shareholder who has the right to vote, to whom they are obliged to listen, but do not always follow their lead. It is very important to maintain a balance between the interests of the company and investors. So, you have found a person who is interested in investing in yOshmarik. What do you need to tell him about the business:
1. The main idea of the business;
2. The required amount of investment;
3. Expected profitability;
4. Risks.
This is all that the investor will need to know at the beginning of your cooperation. When he evaluates the volume of the proposed investment, compares the profitability and risks, and if he likes your idea, then the second stage will come - a detailed survey about the business.
This is when you will have to reveal all the details: why your idea is better than your competitors; how you are going to spend money and on what; when the business will expand, and to what scale; what guarantees you can give and other questions.
It should be understood that laying out all the trump cards at the beginning is not the best idea. It is quite possible that the person will not be interested in business in this area, or he can implement this idea himself.
1. Drawing up a business plan. As mentioned earlier, a good business plan for an investor will always bring several advantages to the businessman's piggy bank.
2. Other information. When and subsequently presenting it, you need to carefully concentrate on all the little things. You need to pay attention not only to all the information inside, but also to your appearance, presentation of the material, confidence, etc. The use of tables, graphs and other graphic materials is only welcome. They help to better perceive information, focus on the right points. It would be a good idea to rehearse the presentation of the business plan at home several times. Also, be prepared for additional questions.
3. Choosing a form of cooperation. Before you start looking for an investor, you need to decide on the proposed model of cooperation. Of course, you can completely rely on an experienced businessman who will offer an interesting way of interacting with the business, but then you lose your dominant position. Do not forget that it is not the investor who dictates the terms, but the businessman. In total, there are 3 ways of cooperation: Receiving a percentage of the amount invested in the business; Receiving a percentage of the profit for the duration of the entire business; Receiving a share in the business. Having chosen the method of cooperation that interests him, the beginning businessman should indicate this method of cooperation in his business plan.
There are cases when investors do not agree with the chosen model of cooperation. You should analyze this situation and understand whether it is worth following the lead of a more experienced businessman, or it is better to insist on your own. Sometimes it is better to sacrifice your principles and receive funds for the implementation of the project, and sometimes to refuse the offer and find another interested party.
4. Search for an investor. After all the preliminary work is completed, it is necessary to proceed to the procedure of finding an investor. You need to work in several directions at once, establishing contacts both in the sphere of entrepreneurs and investors, and asking your friends. Working on the list above, you will be able to try out various options for attracting investments, and if nothing works out, then it is worth contacting the bank.
5. Negotiations with potential investors. It is advisable to find several interested parties who would be ready to invest their free money in the development of your idea. Then you will be able to negotiate from a position of strength and dictate terms. But beginners rarely find more than 1-2 interested people, which is why you should approach the negotiation process very carefully. Convincing the investor that he will make a profit is the main goal of these negotiations. At the same time, it is worth remembering that they will look not only at the prospects of your project, but also at you, so you should watch your speech, appearance and manners. It is advisable to answer all the questions that potential investors may have. This will guarantee that you are really working on your business idea, and that stupid mistakes will not arise at the implementation stage. Negotiations are the most important part of finding an investor.
After the negotiations have been successful, you will need to conclude an agreement with the investor. It is advisable that you take care of creating the agreement yourself and in advance. You should contact an experienced lawyer for this, who will be able to draw up an agreement that is beneficial for both parties.
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