WHAT STARTUPS NEED TO KNOW BEFORE ATTRACTING INVESTMENTS

Before attracting investments, it is very important to understand who you plan to contact because each investor has its characteristics.

That is why we have identified the following main types of investors.

3F investors (or "Three F's") refer to the three main categories of people who are often the first investors in startups.

3F includes

Friends- these are usually close friends of the founders or startup teams who are ready to invest their money in the early stages of development.

Family -these are relatives of the founders or startup teams, and investors often invest money based on personal relationships and trust in the person, rather than an objective assessment of the business idea.

Fools is a term that refers to investors who may not have a deep understanding of the business or the risks involved in investing in startups and may invest based on emotion or intuition.

Angel (Angel):

Definition: An angel investor (or simply "angel") is a private individual who provides capital to a business project or startup in the form of a personal investment, often in exchange for convertible debt or equity. These investors usually help startups in the early stages of development, where the risk is the highest, but the potential return can be very high.

Angel

1 million + per year.

Has a core business that generates cash. Or sold his company.

He is a fan of all popular sports.

He is looking for someone like him, but young and with energy and strength. He sincerely believes that everything will work out for everyone.

50-150x.

Makes decisions based on his experience and self-confidence.

Search for meetings, events, and news about angels. Sell ​​yourself. Only myself.

Super Angels

2-5 million per year.

His job is an investment in startups.

His hobbies are traveling and cars.

Check for 150-300 thousand

Decision-making takes place personally.

You need to search at events, with the help of Crunchbase or through familiar investors.

Angel investors in Uber earned about 4965 X on their investment. You invest $25,000 and earn $124 million.

Angel

At what stage of funding invest in a startup

seed / pre-seed.

What is the motive behind his investment in the startup

Invests. That's what I liked. Motive to take risks, but to make big Xs.

How it works (business model) and the average startup investment check

Up to 1 million US dollars. The angel easily gives money to the founder he likes. Zazvyai takes over a large part of the company. The plus is that he can be in the project to help find new clients and new opportunities.

How investment decisions are made

Light. Individual investor.

Where to look

Events for startups. Business events and community. Angels who have invested in similar startups.

How to be involved in your startup, what to present

Present yourself as a cool expert in what you do.

Main advantages

Easier to attract. Additional support, new customers, and opportunities.

The main disadvantages

Limited budget. Loss of a large fortune at the start. Risk of interference in operational activities.

Funds.

Seed/pre-seed, early Seed.

200-500 thousand + per year.

His work is a foundation.

Hobbies - all popular hobbies, he is like an Angel.

This is his work and career - a task to build for himself a good life.

Fund check from 100,000 to 1 million.

Decision-making takes place collegially or by the managing partner. You need to search at conferences or in your region. This is as convenient as possible.

You need to attract a great product and a team.

Series A (+-) Series B

400-600 thousand + per year.

His work is fund + investment banking

Hobbies - tennis, windsurfing, squash.

Fund checks from 10 to 100 million.

The decision is made only after checking the four, after 6 meetings with the council. You need to search only by contacts with another fund, otherwise 99 percent will not work.

You need to attract traction, order in detail, and understand how you will return the funds.

At what stage of funding invest in a startup

Seria A B.

What is the motive behind his investment in the startup

Find startups that have traction for rational use of donor funds.

How it works (business model) and the average startup investment check

From $100K to $50M. The fund manages the funds of its donors (investors). The task of the fund is to invest funds in such a way as to earn income for its investors and for itself. Invests professionally, and everything is checked in detail. The task of the fund is to invest in a startup that can quickly advance to the next round of investment.

How investment decisions are made

More difficult. After checking the indicators. Collegiate competent authority of the fund.

Where to look

Lists of funds in Google in the cold. Startup competitions. Events for Startups.

How to be involved in your startup, what to present

Prepare a cool presentation at the request of a specific fund. There must be two main things: 1. a product (traction, market, rapid scaling) 2. the ability to raise (convince everyone that in the next round, you will be given even more funds, so those who live here and today will be in the plus).

Main advantages

Large sums. Investing in further rounds. Help in setting up finances and the legal part.

The main disadvantages

Difficult to attract.

Corporate VC

100-300 thousand + per year.

Her work is a corporate structure, such as "Kyivstar".

Hobbies - family, fishing.

Check funds from 0 to infinity.

The decision is made by the board members. On early checks program manager.

You need to search by programs and in FB, among large companies.

You need to attract by increasing income in the main company or cool chips.

Corporate fund

At what stage of funding invest in a startup

Any.

What is the motive behind his investment in the startup

Find startups that can increase the income of the parent company/

How it works (business model) and the average startup investment check

From $50K to $5M. Funds are used by a company that is looking for startups, stages from the earliest to the merger of large businesses.

How investment decisions are made

Difficult. First, the competent body of the fund chooses, and then the decision is made by the management of the main company.

Where to look

Directly to the company that owns the fund. At profile startup events (for example, med tech, legal tech, deep tech).

How to be involved in your startup, what to present

Prepare letters in which you give interesting non-standard solutions in a specific industry. Find a way to get a meeting with the highest management (a greater guarantee that the information will be heard, it will show you as a persistent and creative person).

Main advantages

If you hit the nail on the head with an idea, you can immediately achieve success. Permanent financing or even redemption of the share.

The main disadvantages

Difficult. There is a risk of complete absorption.