Classic venture money is not always the best way to finance the development of a technology project. Check six ways to ensure you get a good venture capital deal for your startup in the article below.
Venture Investments in Startups: How to Find Money?
A venture business or start-up is different from any private business in that it focuses on growth. The task of a startup is to multiply its growth in key indicators for the maximum possible period of time. Profitability is only partially forgotten – your unit economy still needs to grow (improve) over time, and you must go into profit.
Interestingly, with such a rapid pace of development of this market, banks and traditional venture capitalists are not yet able to correctly assess the economy and prospects of mobile projects, taking into account their specifics, and not by analogy with other types of startups. Due to this, the decision on financing is not made so quickly.
It is easy to conclude that the more investors you contact; the more chances you have to raise funding. Unfortunately, it is not. Of course, to some extent, the number of investors you meet affects the number of business meetings you have with them. The entrepreneur may have multiple meetings with the same investor, so the number of meetings may be greater than the number of people contacted.
Which Are Six Ways to Ensure You Get a Good Venture?
Recently, given the constant decline in profitability in a number of sectors of the economy, more and more potential investors began to switch to alternative options for generating income, and those who have sufficient savings began to pay attention to venture capital investments as well. Among six ways to ensure you get a good venture capital deal for your startups are:
- If the company turns out to be efficient and starts to make a profit, then the investor will earn. If the business does not go, then all venture capital money will “burn out.”
- Venture capitalists risk all the funds they invest. At the same time, very little can be known about the company in which they invested.
- Each startup has its own characteristics depending on the field of activity, the intellectual property underlying it, and even the number of founders. However, if you decompose the development of a startup into several milestones, they will be common: development of a prototype, entry into the market, rapid growth, scaling, and transition to the stage of smooth growth.
- If you do not need money, but only support and expertise, then you can connect to startup development programs, incubators, and communities where expertise is shared.
- Meanwhile, the industry that is engaged in traditional methods of hydrocarbon production is no longer considered technologically advanced, although it was such a century ago.
- The main drivers of this growth will be direct and venture investments, and private loans. Investors are willing to give up some liquidity in order to get higher returns.
Despite the fact that venture capital instruments, in terms of investment, are one of the riskiest, bankruptcy cases leading to the loss of all invested funds reach 40%. In the vast majority of cases, the reality turns out to be much worse than the expected result, but if the project turns out to be really successful, the level of return on investment can reach several thousand percent.