Elena Mazhuga, invest- manager of the Genesis Investments fund recently made a webinar for our community.

Elena Mazhuga, invest- manager of the Genesis Investments fund recently made a webinar for our community.

Elena Mazhuga, invest- manager of the Genesis Investments fund recently made a webinar for our community.

The full version of the webinar you can see on our youtube channel, as well as our comments at the topic in this article.

Here are a few tips that are also suitable for communication with business angels (private investors).

1. Cold emails to the investor or the fund manager.

  • Find out the investors focus first. If an investor prefers technology start-ups, don’t offer real estate business.
  • Get intro or refer to the event where you have met before;
  • The cover letter should be as specific and short as possible. Specify the point of your project immediately in 1-2 proposals. Investors receive hundreds of emails every day and therefore, on the first lines assess whether to open the attachment and continue to delve into it; There is no need to write, "all the details in the attachment" ... "when personally acquainted," etc. It is very likely that an investor will not open an attachment with such content;
  • attach a pitch deck. Every project that starts the fundraising should have a presentation. This is much more important in the early stage than a hundred-page business plan. (use a common structure, it has all the items that investors want to know tby the first lok at the project).

2. Be ready for a fundraising

  • It is necessary to prepare for this process in advance, for several months. Prepare predetermined information that an investor may request in advance: your project's development dynamics, information about your team members (resumes, experience), finances, contracts with clients/suppliers, confirmation of some partnership agreements.
  • It is advisable to obtain a recommendation (intro), find common acquaintances who can introduce you to an investor;
  • prepare an offer to the investor in advance. The amount you ask for must be real, valid, be in keeping to the valuation of your company. Do not write - "we need $100K for developing " and do not ask for large sums for the ideas from scratch, it will not bring you the result. Calculate the real costs for a certain stage, for example, e.g. 1 year, based on it then assume what % you are ready to offer to the investor. If you ask for $100K and are ready to give 10%, it means that your company's valuation is $1 million. Don't forget that the investor has his own methods of assessment: the company's turnover, your market position, dynamics, client availability, average check and the main potential in 3-7 years.

3. Call with the investor

  • providing basic information. Comfort of communication with the founder of the project: openness, competence, coincidence of basic views, understanding of business in general.
  • information about the product itself, market, potential, team, strategy, competitors. The person who will communicate with the investor needs to have complete information about the project. You should not refer to marketers or consulting companies that have made calculations for you in basic questions. The founder should be able to explain all the basic processes himself.
  • references: be prepared to provide contacts for those who can give you references (colleagues, executives, former co-founders) or other investors if they are also involved in this round of investments

4. Providing additional information:

  • be ready to give information as fast as possible, do not wait more than a week to provide additional info to the investor.
  • metrics that show the situation in your project (pnl, financial model, etc.). Do not overestimate the metrics. An investor has a calculator so that he can assess the reality of the information you provide. If your turnover is $100 at the time, but you insist it to be $100 within one year it should be, be ready to argue this.

5. Personal meeting or final call

  • f you have answered all of the investor's questions and provided the necessary information, the next stage will be a decisive call (meeting) with the fund director or the investor himself. Try to find a common ground, because in the end they still invest in the founders and the team.An investor will have to communicate with you for several years, so communication should be comfortable.

6. Legal due diligence

  • checking information at the administrative and legal level. Your company should be sufficiently transparent and ready for fundraising. But private entrepreneurs can only get a loan, but not an investment partner.
  • investors usually prefer to register the company in British law jurisdiction. (mainly US, Cyprus, Estonia).

7. You received a rejection from the investor, do not despair:

  • When you start fundraising on a "cold" base without personal intro, be prepared to write thousands of messages. Probably you won't even get answers for some of them.
  • shouldn’t your project meet the investors focus, contact more relevant investors then;
  • If you have received a reasoned response, for example, you are still at a too early stage, continue to periodically update information about your success and when the investor sees your dynamics or you grow to the stage, you can start negotiations again.

We hope these tips will help you find funding for your project. Have a good business partnership!

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