It is not enough one product
Finding investors is becoming easier: new incubators and
According to a California studyUniversity of Berkeley, of all startups only 8% survive. Investors are aware of this, so they come up with investments in the later stages of the company's development. The market conditions are also changing - just a few years ago, the main condition for obtaining investments was the presence of MVP (minimum viable product - the minimum viable product - “High-tech”), now there is little of one product.
Russian startup WayRay - developer of augmented reality systems forautomotive glass - in 2018, closed the investment round of $ 80 million. The main investor was the automaker Porsche. In addition to Porsche, Hyundai Motor, Alibaba Group, China Merchants Capital Foundation, JVCKENWOOD, Sistema JSFC invested in the startup.
The company plans to continue the development of holographic AR-systems with raised funds and open a plant in Germany.
WayRay has not yet released its AR system, but has already demonstrated it several times. The device analyzes the road scene in front of the car and projects data about it onto the windshield.
Serial entrepreneur co-founderInnovative holding Sikorsky Challenge Igor Piir said that investors today are looking at the business model and work with clients. “Just raising money when you only have an idea or a minimal product becomes more and more difficult, you need pre-start marketing: startups need to research the market at the stage of idea formation, before they start to make a prototype.”
What are investors looking at?
Team. In any startup, the most important thing is people, thereforeinvestors first pay attention to the team. It is best to have two or more co-founders, otherwise everything is determined by the specific project and industry. If you are engaged in agricultural technology, artificial intelligence, or building a blockchain-based retail solution, you need to have relevant experience and competencies.
Market research. Igor Piir notes that now startups are oftenThe first specialist is hired CTO (eng. Chief technical officer, Chief technology officer - technical director - "High Tech") and immediately begin to make the product. But it is much more sensible to look for a marketing specialist who will help conduct detailed market research and understand how much this product is necessary for the market.
A working product. Just a few years ago, having a workingThe prototype gave startups a relative certainty that there would be an investment. Now this is not enough, and you need market research, confirming the importance of the product to users. In recent years, most investors have accumulated a kind of “MVP cemetery” - startups with prototypes that have not taken off - and now the product does not guarantee anything. But it is still necessary: the absence of MVP at the earliest stage prevents an adequate assessment of its own value. Now to attract an investor in conditions when a startup has only an idea and a presentation will not work.
The Russian startup Dbrain in 2018 raised $ 8 million from the Bitfury Group and other investors in the second round. These and other funds were used to createthe alpha version of the blockchain platform, as well as the development of the private blockchain Dbrain based on the Bitfury framework - Exonum. The framework allows to exclude the user commission, as well as minimize the load on the public blockchain and speed up the work of all protocols.
Branch of work. Experts Group of Companies "Kryptonite" claim: now they are most willing to invest in machine learning technologies, AI (according to the KPMG report, only in 2017 this amount doubled in the world - from $ 6 to 12 billion), IoT, blockchain-based solutions and big data. In practice, specific investments are often associated with existing large business and its business needs. As an example, the venture division of Severstal Ventures, which was created by the mining and metallurgical company Severstal for investment and development of technology projects. In this case, a startup can become a source of technology for automation, creating new products and improving the efficiency of business processes. In the Russian market, there is a tendency for investments in technology start-ups on the part of corporations - their share in venture investments in 2018 rose to 8.5 billion rubles.
B2b or b2c. In solutions prepared for the b2b segment,invest more willingly. For example, the product Code Monkey is a programming tool for children. The developers entered the market through b2b, personally went around a lot of schools and eventually built a clear and predictable work model. After that, the startup raised $ 2 million in investment, and a few months ago, the Chinese company TAL Education Group bought it for $ 20 million. In b2b, the sales cycle is longer (from several months to several years), but with a b2b product it is much easier to reach consumers, and From a perspective, a b2c product can be made from it by running it on corporate users.
Elevator pitch (“presentation for the elevator”, a short story about the concept of a product, project or service - “High-tech”). In any circumstances, be it randommeeting at the buffet or industry event, the investor is waiting for a clearly formulated hypothesis, a description of the product and a business model. The search for an investor rarely ends in success at the first presentation, so it is important for a startup to prepare a logical and concise presentation for any venue, because there will be many such presentations. Qualitatively prepared elevator pitch and presentation are, among other things, respect for the investor and his time. In addition, the ability to briefly talk about their decision is important for the startups themselves, it helps them to clearly define their place in the world and their vision of the product.
Social networks. Investor Mikhail Taver says he willreads the social networks of applicants, but so far never been, that he refused to invest because of the post on Facebook. So, social networks do not have a critical influence on the decision of investors.
Dress code. According to the interviewed investors, this item interests them last. If you don’t know what to wear, stick to business casual.
Modern startups are the most technologically advanced.
In the Startup Genome Global Startup Ecosystem ReportIt is reported that the latest wave of startups is a “high-tech” company that specializes in relevant areas - from cybersecurity to AI, from medical technology to blockchain. They solve real problems, and as a platform for innovation they see entire cities.
New startups appeared thanks to globalgrowth research and development. In Startup Genome, it is noted that over the past 20 years, the number of patent applications has increased by 174%, while the share of R & D expenditures in GDP over the same period has increased by 13%. According to the report, most actively start-ups grew in the following industries:
- agricultural technologies;
- Artificial Intelligence.
Where to look for money?
Postpone investor search to the later stage of yourdevelopment. At first, try to get by with your own means or borrowed, if possible, a number of banks in the country are happy to give money for their own business. There are acceptable offers on the market from Russian banks offering loans of up to 3 million rubles for a period of up to three years. The annual interest rate, depending on the bank, ranges from 13 to 18.5%. As a rule, such funds account for no more than 80% of the total funding. There are government programs to support business projects in the field of innovation and agriculture from Rosnano or Rostekhnologiya. In addition, in the venture environment there is the so-called “three F” formula - Family, Friends, Fools (family, friends, fools - “High-tech”). But lately, finding money using this formula has become increasingly difficult. “Now it’s hardly possible to get rid of exclusively borrowed funds,” says Mikhail Taver, managing partner of the Gagarin Capital fund. “An entrepreneur must be financially interested in developing his own business.”
If you don’t have your own money, contactappropriate business accelerator. The corresponding lists have already been vc.ru and rb.ru. Accelerator will help you bring the product to the stage of maturity, when they are interested in potential investors.
Look for money in Russia. Conventional Venture Fund Strategy in Tel Aviv- invest in one of the 150 companies that have applied for investments. Therefore, Russian entrepreneurs should look for the first money in the domestic market, where competition is lower. Looking for partners in Western funds is already in the process of developing a strategy for entering new markets. But if you plan to raise money in Russia, be sure to consider the potential sanction risks.
In 2018, the Russian company Fibrum launched a virtual reality platform (VR),available on Oculus Go and Samsung Gear VR helmets. To bring the platform to the market, Fibrum attracted investments in the amount of $ 1 million from the Russian venture funds FunCubator and NP Capital.
Desirium allows users to pay andDownload VR content without removing the helmet. Experiments will be based on the platform - short interactive clips lasting from two to ten minutes in the genres of horror, action adventure or comedy.
Regional projects to find an investor no more difficultthan a startup from Moscow. Mikhail Taver recommends periodically to participate in industry events and write to investors directly. He cites the example of a Novosibirsk start-up iFarm, where greenhouses are managed using AI. The founders of the company wrote to Michael directly and told what they were doing. Earlier this year, Gagarin Capital invested in them.
Industry-specific are great for finding investors.activity. Startups need to periodically participate in events like the Open Innovations Startup Tour and Startup Village. But you must first formulate for yourself the purpose of participation. This could be acquaintance with investors, the struggle for prizes or contracts. But startups have limited resources and the main task is to make a product and bring it to the market. You will spend limited resources on all contests - fall through.
- Investors are treated as a source of money. The investor is the same client and it does not burndesire to part with money. Therefore, he wants to regularly monitor the startup and demand a very tough compliance with the shareholder agreement. Therefore, most likely, "agree" will not work.
- Select the wrong investors. Now for most startups existhighly specialized funds, and often aspiring entrepreneurs do not carry out market analysis, and rush to the first investors. This is fraught with both work with non-professionals and the risk of giving a significant share of your company to an investor for a pittance.
- Having built a working business model in Moscow, they go with it to the regions. Build a working model in Kazan,Novosibirsk or Tyumen is good. But a business successfully operating in Moscow will surely be able to be realized in Berlin, Budapest, New York or Tel Aviv. To do this, you need to localize your own product and find a local investor who will help strengthen the market.