March 22, 2015 at 17:22Prerequisites for attracting investment for a startup in the United States. The look of the former compatriot
Fate brought me to Eugene a couple of years ago. Then I tried to get money to finance my next project through Kickstarter,
I want to share his vision of what conditions an innovative project of domestic
Immediately make a reservation that he himself does not agree with all his theses to 100 percent. Thoughts are presented in the form of brief abstracts and will not take too much of your attention.
Direct speech.
Today I can state a total and deep misunderstanding by ex-USSR startups of the process of obtaining investments in the USA. Only a few who wrote to me about their projects have an idea of how American investors and funds work. And only one project (which has already raised decent money before, and raised very competently!) Has a very clear idea of what is required and in which direction to dig.
Therefore, I decided to make a quick educational program, summarizing the main important points at the stage of presenting the project to the investor:
1) Pitch - the idea should be described so simply that it fits into one proposal. Structural options:
- We make X for Y through Z
- We help X get / solve / eliminate Y through Z
- We are an analogue of X in the sphere of Y, only through Z
2) A package of documents - explaining on your fingers the idea of your project is extremely inefficient, unless this is connected with the anatomy of the hand. They will not talk to you without providing a complete package of documents, which includes:
- Executive summary (no more than 1 page)
- Project presentation (up to 10 pages)
- Business plan (up ti 10-12 pages)
Documents are considered in order from Exec. Summary to Business Plan, but written in reverse.
It should be clearly and clearly written not only about the project, but also about the business model, about the team, product, financial performance (how much has been invested, how long, at what percentage, how many investors, for how long).
3) Opportunities - remember this word! This is the most important word in your appeal to the investor! It is not enough for him to know how much money you need (and by the way, for what?). Most importantly, he must understand what his opportunities to invest in you, and not in someone else, and how he will return at least x10-x20 from his investment in 24-36 months?
4) Geography - it is very important to understand that American investors invest only in American companies whose teams are physically located not just in America, but in the investor's region. I work with Valley investors, and the rule is this: a startup should be within 50 miles or 2 hours of driving from Palo Alto.
If not, no one will even consider the application. Are you in Boston, Moscow or Bali? Wonderful! There and look for an investor.
5) “And I also have such a project for you, and investments are also required ...) - you cannot have several projects! Your project is the only one in your life at the moment. You live with him, fall asleep with him and only dream about him all the time. If an investor finds out that in addition to your main project, you have at least one other project for which you are looking for investments, your interest instantly disappears.
And yes, it will not be superfluous to have: a working prototype, a community, especially paid users, good user base growth dynamics, sales profit and a team. No one will give money to a lone dreamer, who has everything in his head so far, about whose project no one knows and pays nothing.
This, of course, is very brief, only the tip of the iceberg in general points. But without all this, there’s no sense in turning to the topic of investments - you’ll only steal something for a while without any result.
Good luck with your projects.