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Quite often, communication with aspiring entrepreneurs begins with their question: “I need investment! Can you help?”. However, it often turns out that their project is at the stage of a business idea: there is no Concept, no project team, no project roadmap, no sales plan and startup financial model, not even a clearly formulated commercial proposal to a potential investor.
This means that many questions remain unanswered: Is the business idea in demand in the market? How saturated is the product market with competitors? What is the consumer profile of the product/service: what is the pricing mechanism? Is the project idea financially viable or is it known to be unprofitable? How will the product/service be marketed? Do those who will implement the project have relevant experience? What is the schedule and sequence of stages of startup realization? What are the risks of the project and how can they be minimized? How are the contributions of the project initiators and the investor assessed and how will they interact, and how attractive is the project to the investor in general?
There are no answers to these questions, only a business idea and a desire to get money from an investor.
We try to explain that in order to attract investment, it is necessary to prepare a project for investment. This includes the development of a full set of documentation, from market analysis to a project implementation plan. And the answer is again: “Well, if we order you to prepare these documents, will you help us attract investment?”.
What does such a client want – to attract investment regardless of what the project development will show? Or to engage professionals to prepare such a set of documents that will make the project attractive to any investor regardless of the objective evaluation of the startup? And if such a customer needs a project realization plan only to show it to an investor, but not to use it in practical work?
The very fact of this approach says that such a startup initiator is unlikely to find a professional investor. He has a chance to get money only in the market of emotional sales through crowdinginvesting, using his own charisma and advanced techniques from the sphere of sales psychology. And the project itself is unlikely to be practically realized, because the startup founder simply does not need a specific professional plan for project implementation.
Many aspiring entrepreneurs simply do not understand who investors are and what exactly their interests are. Investors do not finance ideas, investors invest in projects, and this is a fundamentally different way of thinking. To fund an idea is simply to give money to its author for the sake of participation in the supported cause. A philanthropist, philanthropist, philanthropist, philanthropist, i.e. someone who does not expect to receive income from the project or who treats his money lightly, but definitely not a professional investor, can finance an idea.
Investing in a project means investing money with a thoroughly calculated return on investment and minimal risks. Investors do not need ideas, they need a project and confidence that it will be realized. Basically, an investor just needs income with minimal risks. An idea becomes a project only after it is calculated, justified, when there is someone to realize it and there is a clear schedule for its realization. And the preparation of the project for investment often serves as a litmus test of whether the author of a business idea is ready to realize his business project professionally, or whether he is a free artist, for whom it is too boring, and to drive himself into the framework of specific obligations – and not acceptable at all. But free artists are funded by patrons, and we are dealing with a pool of professional investors.
We suggest that project founders always mentally visualize the portrait of an investor who might be interested in this startup. Is it a philistine acting under the influence of emotional sales or a dry professional? What information will he need to make an investment decision? Is the amount of investment required significant to him? What are his interests and what are you prepared to offer him? Without forming a portrait of the investor, it is hardly possible to attract investment.
And one more thing: everyone who decides to cook a new dish for the first time needs a recipe that clearly indicates the proportions of ingredients, baking or cooking time, sequence of actions… If a novice cook does not know what products he will cook with and in what sequence – it is unlikely that he will be able to feed someone deliciously. And if he starts charging money for the dish before he has the exact recipe, he is unlikely to succeed financially. And realizing a startup is much more difficult than cooking the most exquisite dish. And the role of the necessary recipe is played by the documents that we help create when preparing a project for financing.