Recently, such a term as "startup" can be heard almost everywhere.
It is directly related to business. By creating a competent startup and properly managing it, in the end, its author can make a very tangible profit. But more on that later.
The concept of "startup". Origin story
The concept of "startup" stands for a new business idea that the author wants to promote in the core market, but this moment conducts market research.
Startup goal is the opening to the maximum efficient business, capable of quickly spending, bringing more at minimal cost, and also carrying a certain benefit for society. Most often, startup owners independently look for sources of financing for their project.
A startup can also be called a project that develops under conditions of uncertainty, needs to find the most effective solutions for optimization, and also requires capitalizing itself.
The term was first used in the thirties of the last century in the United States. Two local students Hewlett and Packard decided to develop their own company. They did not think about the name "Start-Up" for a long time. Already over time, this small organization was able to grow into a giant on a global scale. Today we know this company as HP (Hewlett-Packard). These guys were able to create a clear difference between a startup and other forms of business.
So, for example, is not a startup. The reason is simple - the concept of this term is such that in order to receive the status of "startup" there must be a unique idea that has not yet been implemented by other entrepreneurs.
Main features
Let's take a closer look with main features, with which you can distinguish a startup from other forms of business:
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The concept of "startup accelerator" is currently not very well known in Russia. But in the West it is very familiar to every self-respecting businessman. So what is an accelerator? In fact, this is an organization that is engaged in helping other companies wishing to enter the local or domestic market.
Accelerator Offers its potential residents a streamlined program. With its help, a team of enthusiasts (if a start-up company consists of several people) perfects a business model, acquires the necessary contacts. All this leads to a full increase in sales. Depending on the degree of expected business performance in the market, the program can last from three months to six months. As a rule, the accelerator offers . Resident companies may be located here in the process of acceleration.
The earnings of accelerators are based on the fact that even before the practical implementation in the form of the development of the company on the market, they agree to take a certain share of the project.
Consider a specific example.
Vasya Pupkin decided to create a new electronic watch. He independently developed the concept, tested it, and was convinced of its durability. But he has no money for mass production, patenting, transport, tax and other expenses.
Pupkin decided to turn to the accelerator for help. He showed a business plan and stated that his project really has good prospect development on domestic market. The accelerator believed and gave the go-ahead, but on the condition that when the project was sold, he would be credited with 10% of the amount received.
In other words, the accelerator immediately takes 10% of the share for itself. Two years pass, Vasya Pupkin was able to successfully implement his idea on the market, his products are in steady demand. But here Google decided to purchase the company. Vasya Pupkin thought for a long time, and yet decided to sell. The final amount of the deal is $250 million. In this case, Vasya will receive 225 million, the remaining 25,000,000 - an accelerator (10% of his share).
If you want your idea to really become popular and widespread in the market, we recommend adhere to the following rules:
How to turn your startup into a profitable business is described in the following video:
Idea Examples
In 2006, Pavel Durov created a new alumni forum from scratch, which he soon renamed into a social network. A simple forum has turned into the largest social network in the CIS - VKontakte. At the moment, he is also creating a new Telegram mail service. Both in the first and in the second case, Durov was able to succeed thanks to competent management and minimal financial costs. At the first stages, he spent money only on paying for hosting. The rest of the creation and development of the site Pavel performed together with a team of enthusiasts.
The same can be said about Mark Zuckerberger, the founder of the largest social network in the world of Facebook. Having a good command of programming languages, he created his own portal where users could communicate in a convenient way. Compared to many forums, the "social network" form was the one most liked by the users. Thus, Zuckerberg became one of the most successful young entrepreneurs in the history of mankind.
It is not necessary to start promoting your startup in the IT field. You can start producing interesting gadgets, useful things for everyday life, and so on. If you decide to engage in the provision of services, try to make them as voluminous as possible, to introduce something new.
Overview of platforms, markets, exchanges, conferences for opening and supporting new startups
The most popular platform for developing your own startup is Kickstarter. This is a project that raises funds for the implementation of scientific, creative and industrial projects. This is where crowdfunding comes into play. In other words, caring users donate a certain amount of money, which they consider necessary. Founded at the beginning of 2009. Using the services of this portal, you need to focus on the attractiveness of your project. You must convince the investor that the idea you propose will make life really convenient and comfortable.
Angel List- Another platform that specializes specifically in . With the help of the presented service, you can not only raise funds, but also recruit employees to your team. At the moment, the Russian segment of the site contains over 400 companies. The number of investors has already exceeded three thousand. What is most interesting is that even if you were able to more or less get a startup on its feet, here you can find useful connections that can effectively develop your business.
StartupPoint- domestic platform. In terms of the level of competition, of course, it cannot compete with the portals described above, but at the same time, its advantage lies in the fact that it is more convenient to promote your business here. Russian market. Over the years of its existence, it has managed to attract 3.5 million dollars, which went to the implementation of very interesting Internet projects.
Rules for presenting an idea to potential investors
If you want to attract people to your project who invest their money in your business, you must adhere to the following rules:
The startup carries goal profit from the successful implementation of a new idea. In most cases, financial investments are required, but there are exceptions. To get the most positive effect, the author of a startup must control it at every stage of development. The search and proper attraction of investors will provide an opportunity to ensure good results of joint cooperation.
The following video lesson will help you avoid mistakes when promoting your own startup:
The activity of SEO specialists makes it very difficult to access the information needed by a novice entrepreneur. You are unlikely to find a recipe for success or a formula by which you can launch a successful startup. Do not be naive to believe that you will get a ready-made solution just by typing some magical combination of characters on the keyboard and providing a set of further actions for the search engine. The rapid spread and popularization of full-time business trainings and seminars in this situation seems quite natural. In fact, the theorems and axioms of the initial stage of a startup, which can eventually be successful, are simple. Businessmen, for the most part, remember them no earlier than the start of work on the third project. We have tried to identify the five most common misconceptions of market sharks, which they got rid of empirically.
It's not enough to just make a "cool" product
Perhaps you are a reincarnated Bell or Popov, and your innovation will subsequently become epoch-making. You may even ask:
Then why the hell do I and my team do marketing?
I answer: in the modern world, when promoting a startup, one cannot rely only on “word of mouth” and an uncompetitive price-quality ratio. If you do not promote your product, competitors will do it for you, but then the notorious "word of mouth" will play on the side of rivals. And not only it.
Imagine for a second that a popular blogger, being delighted with the service provided by you, wrote a laudatory post about it. Perhaps his readers will even want to buy your product, but this is not the main thing, if only because you did not take care of it in search engines and offline outdoor advertising. People just don't know how to find your product. And the most important thing in this situation is that "business sharks" do not sleep, they "monitor" people like you 24 hours a day, and when they find them, they quickly eat them up. You will not even have time to understand anything - the engineers of the conditional "Samsung" or "Apple" will very quickly test your creation and find a way to get around the copyright issue. Do not rely on the fact that with such a development of events, the giant will undertake to feed you for the rest of your life.
Those.
If the world of advertising and PR technologies disgusts you, seems boring, deceitful and unnecessary, grit your teeth, take out your wallet, pay for the work of a professional and forget about it. If you want to control everything on your own, then remember that you must be able to correctly convey information about the product, as well as understand the psychology of the consumer.
First of all, people in your product are interested in the benefits that they received in return for money. That is, if you invented a flying folding car, every person should understand from commercials and banners that the lucky person who has already bought a car will never again stand in traffic jams and frantically look for parking spaces shopping centers on the weekend. At the same time, it is completely optional to notify the consumer about what material the car body is made of.
Need to listen to the market
How wonderful it would be if any original idea brought income to its author! Or maybe, in order to earn a million, it is enough just to implement it qualitatively technical side and hire creative advertisers, with the help of which the brand will be remembered by the maximum number of people? Yes, this will really be enough, but only if someone needs the product.
Of course, if you have interesting innovative ideas, it is worth developing them, no matter how profitable they may become. However, if you want to create a successful startup and become rich with your idea, its ability to satisfy a certain need of people should be the most important criterion for its potential success.
It is very difficult to find an unoccupied niche, however, it can be done without the help of specialists in sociological and economic issues. It is enough to have an inner instinct (the same “fourth factor of production”) and pay attention to the little things. For example, coming to family dinner to neighbors, you can pay attention to those household problems that you also face, but cannot get rid of them due to the lack of necessary equipment in hardware stores. Bringing the right device to the federal or city market, or building it, can be your gold mine.
Maintain a balance between the investor and the market!
The ability to win the trust of someone who is at risk by investing a lot of money in you is one of the most important components of entrepreneurial talent. However, there is not so much magic in this process (in any case, in comparison with the almost complete unpredictability of the success of a new product on the market). You can't win over bison who know their business by charm alone: you need a flexible strategy and a clear business plan. You must understand that an investor may not be satisfied with almost any point of the project: from the idea itself to the planned deadlines for preparing the product for sale.
Despite this, the current opinion among start-up entrepreneurs that most investors begin to dictate their own rules and actively impose their views on startups is a myth. If an investor knew how to conquer the market, he would be promoting own ideas rather than financing strangers. Each startup is individual in the sense that there is no proven scheme for pipeline processing of innovative projects.
A startup must be able to meet the needs of both parties: both the market and the investor. If you are sure that the corrections proposed by the investor will lead to the collapse of both, you should not be silent about it. You need to work hard and have a lot of patience in order to explain to the investor why this particular scenario will bring him more money.
Getting investment is not a guarantee of success
As soon as the startup gets the money, he thinks it's in the bag. In reality, this is only the beginning of work, the first step towards creating a successful startup. Investments should be treated like a loan - with the same responsibility. If, before receiving the money, the entrepreneur can still afford to spend time on studies or third-party earnings, then after the investor's trust has been won, complete dedication will be required.
The most likely reasons for the possible failure of a promising startup are the inefficiency of the team selected by the startup, the inability to respond to changing market conditions, and lack of flexibility in marketing matters. You can keep remembering the pitfalls of various kinds, or you can try to look at the long process of preparing the product from the outside and find the root of all these hypothetical problems. Then it becomes clear that the dedication of the leader, his "burning eyes" and cold prudent mind are able to cope with any of the difficulties that arise.
Successful Startup: A Startup Must Be Viable
Your business partner, and part-time friend, was disappointed in the project and left it? Is the investor drowning your offspring with his unreasonable actions? Did the technician leave you? Or maybe you yourself began to think that nothing from the project you are working on will not burn out?
A combination of circumstances cannot sink any of your undertakings, and a startup is no exception. Almost everything can be cut off from the existing layout - only the core should remain in it. This core can be the belief that you are the one who will make the world a better place or the one who will definitely earn a million to provide for your parents. The main thing is not to betray your ideals and not be led by emotions.
Do not be afraid to experiment: the only thing you cannot change is the terms of already signed contracts, and you can try to revise them together with representatives of cooperating enterprises and investment funds. ⓂⒷ
Last update: 03/03/2020
Reading time: 13 min. | Views: 10962
Hello, dear readers of the business magazine "site"! In this article, we want to tell what is a startup in simple words how to create it and where to find sources of funding for the creation and development of projects.
How often do you hear the word startup these days? But it has become almost colloquial and is found in everyday life all the time. Some call a startup exclusively, others believe that startup It's basically any business project.
If there are aspiring entrepreneurs, novice investors, or at least financial theorists among the readers, then this publication will be useful for reading. Because the story will be about the most basic concepts associated with the term startup", the history of its occurrence, stages of creation and development of start-up projects and sources of their funding.
So, from this article you will learn:
- What is a startup in fact - the main features and features;
- How to create a successful startup project on your own;
- Where and how to find funding for startup projects;
- Who is a startup.
And the article is intended for those who know only by hearsay about financial undertakings of this kind and want to get to the bottom of the truth.
In the article, we described what a startup is, gave complete definition the term "startup" in simple words, brought the main stages and key points in the creation and development of projects, as well as brought relevant and interesting start-up projects for small businesses
far away 1939 in the United States, near San Francisco, which was a center for the development of new technologies, graduates of Stanford University, David Packard and William Hewlett, developed the idea, tested it in practice and called their project a startup(from English startup - start, start).
Today this project is known as a huge company that produces computers, laptops, office equipment and related software under the logo HP, or Hewlett-Packard.
Later, in 90s, many financiers and entrepreneurs argued over the definition of the term startup, calling the main feature then short term active activity of the company, then the mandatory rapid growth, then the creation of a product or service in a high-risk environment.
The classic definition of the concept of a startup is considered to be the one that was formulated by the successful American startupper Steven Blank, namely:
« Startup is a temporary structure aimed at finding and implementing a scaled business idea” .
Simply put, startup – this is new financial project , the purpose of which is rapid development and profit.
But is everything so simple? After all, if you rely on this short definition, then absolutely every newly created business can be proudly called a startup project.
It is not for nothing that new technologies were mentioned in the story about the history of the creation of Hewlett-Packard. After all, the first product released by HP was conventional generator, where a simple incandescent lamp was used as a resistor.
This innovation (namely innovation!) made it possible to make the operation of the generator more stable, and at the same time reduce its cost. So the project became competitive and profitable.
Thus, the main characteristic of startups is the use of some kind of latest technology , no one else previously untested.
For example, opening a traditional cafe- this is an ordinary business project, but if the service in this cafe is done in some completely innovative way, which is ideologically justified and financially justified, then this is a start-up project.
Other erroneous opinion is the belief that a startup is necessarily a project created on the Internet. There are, of course, reasons for such a statement: now the sphere of Internet business is developing so actively, that almost all innovations are connected precisely with the worldwide network. Therefore, most people who do not understand deeply the intricacies of business and new technologies call any Internet project at the same time a startup.
What other distinguishing characteristics of startups exist?
- Design and development of products, services, ideas, which is offered by a newly founded young company (for the implementation of the project it is necessary to create a legal entity), always engaged in a team of like-minded people.
In this team, everyone has their own responsibilities, but they are united by the belief that the result of a common cause is necessary for people and can improve life in general.
No matter how pathetic it may sound, but practice shows that only those startup projects that began precisely with the formation of such a global idea, were able to overcome all the difficulties of growth and development and turn into a long-term profitable business.
- A startup project, like any other undertaking, needs cash injections.
But it so happened that startups are almost always young people, students and even pupils, who do not have enough funds to develop their project, and their task is different: they must develop the idea, product, service that they offer.
Therefore, an important part of the work on the project is the search for sources of funding. Moreover, the further the project moves, the more funding it needs. Who usually finances such projects and where to find these sources will be discussed in detail in the continuation of the article.
Startup - a completely young project, which is based on some absolutely new idea, not used before by anyone;
The project can be created in any sphere of life: medicine, trade, transport, services, and so on;
The successful development of a startup project requires a close-knit team of developers and assistants, as well as sufficient funding until the project becomes self-sustaining and profitable.
The main problems of startups and features in their creation
2. Features of Russian startups 📑
Separately, it should be said about the specifics of the creation and development of start-up projects in Russia.
Everyone knows that Russia is far behind the West in shaping the business sphere. Therefore, what in the USA and Europe has long ceased to be a novelty and has acquired well-established forms, we have just going through the stage of rapid growth and formation. In particular, this statement applies to startups.
In Russia, there has never been a shortage of good brains and bright ideas. To date, there are also conditions for the implementation of interesting ideas. But as you know, in any barrel of honey there is a fly in the ointment.
The main problems of startups in Russia
Analysts identify 3 (three) problems faced by Russian startups:
Problem 1. Monetary support
The problem arises almost immediately when the project begins to need financial support.
Finding sources of financing is not easy even for adult serious entrepreneurs who own an established profitable business and good reputation. What can we say about young people who do not yet have a reputation or profit from their project.
Banks they ask for a high interest rate for a loan, which in any case will have to be repaid.
Crowdfunding in the Russian segment is not yet so developed, and access to Western sites is associated with the complexity of converting and withdrawing money. More details about what Russian sites exist and so on we wrote in previous issues.
Venture funds put forward a lot of conditions before allocating financial support to a young team.
It remains to rely on personal funds, the help of family and friends, or try to seek business angel who will believe in the project and finance its development.
Overcoming this complexity, perhaps, in the first place determines the success of the entire project as a whole.
Problem 2. Startup development time
Another problem is related to ignorance of the theory of startup promotion in time. In itself, such a project is characterized not just by development, but by rapid development. And relegated to this stage from 6 (six) to 8 (eight) months. And then, if the project does not start to make a profit and pay for itself, they close it.
In Russia unsuccessful startup projects drag on for years, sucking money out of the startuppers and investors themselves and turning into unprofitable hopeless enterprises.
Problem 3. Project implementation
There is another fairly serious problem in Russia in the field of startups.
It consists in the lack of interest among large manufacturing companies in acquisition and further development successful innovations.
Whether this is due to the general policy of the state, which does not pay any attention to creating conditions for the emergence of this type of entrepreneurship, or just the start-up industry is still at a low level - it is difficult to say.
Let's hope that over time, Russian startups will have strong support in the form of government agencies interested in the development of innovative technologies in practice and their implementation in existing industrial production.
At almost all stages of the development of a startup project in Russia, there are serious difficulties associated with the still imperfect ecosystem for such projects and the uncertainty of its further existence.
Stages of development of business projects + comparative table
3. Key stages of development of startup projects 📊
Like any project, a startup goes through several milestones on the way to its development.
It should immediately be noted that such a division is approximate and depends on purpose and project focus, from the scope of its activities and other criteria, which will affect both the speed of development, and the amount and level of investment in the project, and the result of the start-up company.
Such a division is based on the development of the same Stephen Blank, author of the book “ Four steps to enlightenment”, where he described the model of the gradual development of a startup and the careful use of investment funds. Later, this model formed the basis of the philosophy of the lean startup Eric Rees.
Stage number 1. The birth of a startup (pre-seed, or pre-seed)
This is the idea stage. The same exceptional idea, which is based on some kind of innovative product, service, technology capable improve and make life easier modify an existing product, enhance the effect of the drug, and so on, depending on the field of activity of the creator of the idea.
At this stage a team of like-minded people, assistants who believe in the effectiveness of the conceived business is formed, an approximate plan for the development of the idea is developed, options for finding investors are considered, and a prototype of a product, service, technology is tested, if it has already been created.
Funding is needed at this stage, even minimum. Most often, personal funds of developers, their families and friends are used here.
If necessary and possible, it makes sense for a startup to contact business incubator where he can be provided with an office space with connected communications and different types services ranging from secretarial to legal and advisory.
Finding an investor at this stage is very difficult., since the project does not yet have any achievements by which one can judge its effectiveness.
Nevertheless, it is worth trying, as there are investment companies that specialize in investing in startups in the early stages of development.
Such organizations do not have large capital, but at the same time they have a strong analytical apparatus to conduct an examination and calculate the prospects for investment.
Stage number 2. The formation of a startup (seed, or seed)
At the seed stage of startup development, a working model already exists, a well-coordinated team has been created, where the functions of each of its members are clearly distributed, a detailed strategy for promoting the project to the market or to the user environment has been drawn up entity, made the first steps in advertising and searching for investors.
The task of startups at this stage– debug the product promotion system and seek funding sources.
Yes, it is these components that are more important than bringing the product, service, technology to the ideal.
Because attracting investors is a painstaking task that requires time for direct search, negotiations, decision-making and conclusion of an agreement. Sometimes it can take a month or two, or even more.
During this time, it is quite possible to bring the product to mind and even get some profit, which will certainly have a positive effect on the investor's decision to invest his money in such a promising undertaking.
Funding at this stage is already more serious, since it is required to pay for the work of team members, rent and maintenance of the office, if necessary, overhead costs.
Finding an investor at this stage- the task is also not an easy one. More investments are required than at the initial stage, and there is no profit yet or it does not cover current expenses. On the other hand, there are fewer risks.
And here the ideal option would be to find business angel , the person who calculate the prospects of the project and wants to invest in it a certain part of their own funds in.
Another source of funding at this time is crowdfunding (public funding) - receiving funds from a community of people who are ready to add up money to provide assistance, in this case, in the development of a promising startup project.
Stage number 3. Early development of the project (Alpha version)
Stage early development characterized by the presence of an operating company that makes a profit, occupies a prominent place in the market or other consumer environment and is popular among users of the product.
The task of startups at this stage becomes the final formation of a product, service, technology, correction of identified defects, inaccuracies, that is, bringing it to an ideal state.
At the same time, the promotion of the product on the market continues, massive advertising in order to increase income or expand the consumer circle.
The need for additional funding remains, since the costs of maintaining the company and the implementation of marketing plans are growing, and although there is a profit, but does not cover all costs.
To attract investors early development stage – Golden time : they themselves find startups at this stage of development. This is understandable, because it is already visible and the effectiveness of the idea itself, and company profitability, and other characteristics pointing to the prospects for further cooperation.
Here you can connect investment venture funds and business accelerators- organizations that specialize in professional assistance to developed start-ups that are ready to grow into a big business.
Stage number 4. Startup Expansion (Closed Beta)
Extension - this is the stage when the company has a completed functional product that brings constant profit. Marketing strategy at this stage, it has been worked out to the smallest detail, and the company is ready for scaling, that is, increasing sales, distribution in related areas of activity, or attracting a mass circle of consumers.
An important task at this time experts consider the correct construction of both the company itself and its relations with investors. What is meant? The owners of the company must decide on its future and, in accordance with this, distribute the shares among themselves and formalize relations with investors legally.
If the founders intend to develop the business, especially when one of them is also a product developer, then it is more logical to direct efforts towards obtaining high profits.
Besides, desirable restrictamount of investment from and place bets on business partners.
If the company is supposed to be sold or the project can function perfectly without the direct participation of the founder, then the work should be aimed at finding a suitable investor who want to buy a controlling stake at a fair price.
Having saved a small share, the startup gets the opportunity to take on other projects.
Stage number 4. Project Maturity (Open Beta)
In principle, the stage of maturity says that start-up project turned into a serious business when a company occupies a leading or close to it place in the market, has a high payback, the company staff is a team of highly qualified specialists, and their work is debugged.
Most often at this stage, the company begins issuing shares that generate income for its founders.
In other cases, the company is sold as a ready-made business.
Undoubtedly, in the development of each individual project there may be a different number of stages. It depends on the goal set by the startup developer, the field of activity and the overall development strategy of the company. And only one item remains mandatory for any startup project: each of them needs an investor!
The main sources of funding will be discussed in the next part of the article.
We propose to study the table, which describes what is needed for each stage of startup development, as well as where and what funding is needed:
| Stage | What is there? | What is necessary? | Financing |
| Origin (pre-sowing/pre-seed) | Formulated idea, developers, a team of like-minded people. | Drawing up a development plan, testing the product, searching for investors. | The minimum level, the use of personal finances, the involvement of family, friends; business incubator. |
| Formation (sowing /seed) | Working version (prototype) of the product, current team, detailed marketing plan development. | Product introduction to the market / user acquisition, advertising, search for large investors. | Mid-level, third-party investors, business angels, crowdfunding. |
| Early development (A-version) | Operating company, profit, prominent position in the market/popularity among users. | Finalization of the working version, correction of defects, promotion of the product to the market. | High level: venture funds, investment companies, private investors, business accelerator. |
| Expansion (closed B version) | Finished functional product, stable profit, serious management, advertising. | Signing long-term contracts with partners, expanding the network, increasing the number of users. | Distribution of shares between founders and investors, search for a large investor. |
| Maturity (open B version) | Leading position in the market, well-functioning work, high profitability. | Issue of shares, search for a buyer ready business. | Full self-sufficiency of the company. |
4. How to attract investments in startups - TOP-7 sources of funding for a Startup project 📋
How often does it happen in life when I have an idea but no money"! And most often this happens with start-up projects, which, as mentioned above, are created by young people who do not have sufficient funds to finance their project.
Fortunately, the opposite is also often the case: I have money but no idea". There are always people who cannot come up with an idea themselves, but they have the gift to recognize promising projects, know how to develop them and are not afraid to invest in them.
We are talking about investors and investment organizations that specialize in investing in start-ups.
But in fact, there are many more sources of funding. Each of them has its own distinctive features and capabilities at one or two stages of project development.
Investing in startups - finding an investor for a startup: the main sources of project financing
This section of the article is devoted to a detailed analysis 7 (seven) main types, or sources, financing start-up projects.
1) Personal savings of startups
Used at the stages of origin and formation, when product idea, service, technology, as well as the business plan of the startup itself, are under development, and so far there is simply nothing to offer outside investors. By the way, we told in the last issue.
In addition, often the creator of the idea does not want to share all the details and subtleties of the model he is developing for fear of losing authorship and control over the development of the project.
Attracting third-party investments in this case is impossible, except for those that friends and immediate family are ready to make.
2) Funds of relatives and friends
They are used at the first stages of the project formation, when there are already costs, but there is no profit yet. At this point, friends and relatives can act not only as financial helpers, but also as early adopters of a product or service.
By the way, analysts say that this source of startup investment in Russia is very common and ranks second in terms of investment.
3) Crowdfunding
The so-called crowdfunding can be used by a startup at the initial stages of project development.
What is crowdfunding? This is a voluntary collection of funds, and not only material ones, for holding events or creating objects and values. social, public, political, cultural, scientific orientation.
Crowdfunding is carried out most often through the Internet., and it is characterized by a clear goal setting, an announcement required amount, budgeting, or costing, and be sure to openly inform the participants in the collection.
This type of financing is popular in the West since 2000 and since 2007develops in Russia. Internet platforms ( kickstarter.com in Europe and USA, boomstarter.com and planeta.ru in the Russian-language part of the Internet), through which you can declare your project and ask for financial assistance, will definitely offer the organizers to establish an award for participants.
Participation in the camp is rewarded in 3 (three) ways:
- Gifts or prizes;
- Getting a small share in a business project for which money is being raised;
- Getting a share of future profits or a return on investment.
Who mainly uses crowdfunding?
Most often, of course, money is collected to create music albums, filming, book publishing, social and charitable projects.
But, for example, in 2008, the notorious Barack Obama collected only for the first stage of his election campaign through crowdfunding over $250,000.
4) Credit
As mentioned above, credit- one of the most undesirable types of financing for a new project.
This is explained by quite understandable reasons, namely: startup - company with high risks, which are often difficult to calculate, it is also difficult to determine the level of profitability of the project.
Therefore, it is more logical to take a loan for the development of such a business at later stages, when these risks have already decreased and profitability has increased.
5) Business angel (obsolete Russian "philanthropist")
This is the name of independent investors who invest personal funds at the earliest stages of startup development and, on this basis, sometimes participate in project management.
Generally, business angel is the dream of every startup. In addition to money, they also have professional experience in marketing and finance, and due to their interest in the success of the project, they can provide professional assistance at the stages of formation and early development.
But we must be aware that attracting a business angel at the first, most high-risk stages of project development will require transfer of a large share of the business to his ownership.
If a ultimate goal a startup is just selling a ready-made business, then there will be no problem. But if a start-up intends to continue to engage in his enterprise, then relations with a business angel and his share of participation in the enterprise must be legally formalized at the very beginning of cooperation.
- Firstly, if the startup is fresh and of interest in social, scientific and public terms, then you can contact crowdfunding platforms which have already been discussed here.
- Secondly, if a startup project has a serious scientific, informational, industrial or technological focus, then it makes sense to contact specialized sites and forums, which discusses not only general issues business, but there are also potential investors. They are also interested in finding profitable projects.
- Thirdly, you can contact directly through the websites and offices of investment and venture companies. As a rule, by implementing government programs support of private business, it is these companies that hold seminars, conferences, competitions and exhibitions, where, in addition to information and advisory support, you can find future partners and investors.
Question 3. How to come up with a good idea for a startup project and bring it to life?
A good idea is what every successful startup starts with. There are people who generate such ideas with enviable constancy.
But what about those who, having both the desire and the ability to start their own business, cannot decide on an idea?
Experienced startups advise the following:
- An innovative idea should lie on the surface. That is, it should be something ordinary, but imperfect. So imperfect or inconvenient that you want to correct and thereby help all the people who are hindered by this imperfection. Therefore, look closely at the daily life around you and notice everything that needs to be improved and corrected.
- Don't be afraid to fantasize! All latest achievements were once fiction, fantasy and seemed like a pipe dream. But it happened because someone was not afraid to turn the dream into reality.
- Write down any ideas and interesting thoughts, no matter if you came up with them yourself or heard from someone. And then try to try them on in real life. It is possible that this is how you will find that unique niche where you can apply your talents.
- If you feel that you have found something interesting, investigate the relevance of your idea. Forums on the Internet, specialized sites on the problem, conversation with potential consumers will help to find out the relevance of the idea, its scope and direction of development.
- If the idea is found, and you are sure of its prospects, then start acting: make a plan, look for helpers and like-minded people and run project to life. If you do not have sufficient funds even at the initial stages, try to save on everything you can and look for investors for further development.
- Be confident in yourself and your abilities, optimistic and determined to succeed. There will be many difficulties along the way, but the result is worthy of overcoming them.
8. Conclusion + related video 🎥
Modern life is developing at a rapid pace, which means that there will always be more and more new ideas that deserve attention and development. And since there are ideas, it means that there are opportunities for applying your abilities and talents.
In conclusion, we suggest watching a video about the startup (what it is, how it is created and promoted + examples of successful startup projects are given):
And the video “STARTUP SHOW by Dmitry POTAPENKO”, where young entrepreneurs present their start-up small business projects.
You just need to believe in yourself, and, starting small, gradually move forward, to high results and achievements.
Startup founders - who are they? Active and multifaceted individuals who are able to think outside the box? Unique people who know the secrets of success? Yes, these abilities are an advantage, but they are not the basis.
A successful startup creator must perform unusual duties, have knowledge in the field of PR, development, sales, product design. Such a person should take aim at lofty goals and do everything to reach them.
Let's talk about 5 significant qualities that a startup creator should have. They are necessary for the effective planning and development of a new business.
1. Activity
One of key qualities, which is necessary for every startup creator. The activator turns thoughts into actions. He is impatient and strives to quickly test everything in practice. The activator resorts to friends to say, "Let's start a company!". He is the initiator of the development and launch of a new business. A person with activator abilities is the core of the team. It is he who finds the main idea, necessary resources, organizes meetings, etc.
The activator does not know in advance what the result will be. However, he is able to act decisively, despite possible difficulties and failures. He is eager to try something new and encourage his friends or partners to participate in this business.
2. Strategy
Having a quality like strategic thinking, allows a person to identify various development options and highlight those that will lead to success. Such a person is looking for information that can increase work efficiency, plans alternative development paths, and selects profitable models.
The strategist is able to choose the right niche and correctly position the product, think over the name of the company, develop a trade offer and choose promotion channels. The creator of a startup must be able to see the whole picture, identify weaknesses in the business, and find ways to coordinate the efforts of the company. He is obliged to capture the intricacies of a startup and offer consumers what they want.
3. Adaptability
A successful startup must have the ability to adapt to the requirements of the market. If external circumstances change, you should quickly and correctly respond to the new situation. This is the only way to succeed and change the direction of development in time. The ability to "turn" the business in the right direction - required condition effective startup.
It's good to have a "dream company" in mind. However, one cannot follow one planned plan if the events taking place around cause the need to adjust the planned strategy. If necessary, the manager should change the focus of his product. It is important to adapt to the consumer market in order to new business turned out to be popular and successful.
4. Discipline
To effectively promote a new business, you need the ability to clearly structure and discipline. The process of creating a company can drag the team into chaos. It is important not to get lost in the variety of activities and to be able to organize yourself and the company.
Discipline allows you to prioritize your work, create an action plan, and think through the necessary activities for each day. Discipline contributes to maintaining order in the team, uniting the team. This is the basis for effective and dynamic business development.
To achieve the final result, it is important to build competent work and discipline plays an important role here.
5. Focus
Ability to focus on a goal important quality founder of a new company. People who are able to focus on the object can follow the plan, adjust the strategy if necessary, and choose important directions for development. They prioritize and then take action.
You can succeed in developing and promoting a startup if you have the ability to focus on key tasks. This ensures resource savings and a competent distribution of opportunities. It is necessary to focus on what is important at a given time and on what will ensure the achievement of the final result. If you spend time on solving non-essential tasks, you can not achieve the main goal of the business.
Startup founders are unique people. They must have special qualities that help them become successful and achieve results in a new business.
The development of various industries makes it possible to increase the volume of products, as well as improve its quality. This is just one of the profitable areas in the introduction of new technologies in business. Each industry seeks to improve or modernize its functionality. Such types of optimization bring any project financial success. More and more young people, having a sufficient level of knowledge, are trying to develop one of priority areas in business. It can be information technology, programming and so on.
Startup Challenges
Thanks to such innovations, many companies with branches around the world are developing. However, on initial stage such enterprising people are not always noticed. This leads to the fact that a business idea that has a positive economical effect, is lost, never having received a real embodiment. It's all about funding the project. Not everyone can raise the required amount to launch their own startup. Therefore, we have to look for opportunities on the side, attracting investors, sponsors, and investors.
Financing a startup in our country is a complex and multi-stage process. Old school businessmen are not yet fully open modern technologies and information innovation. Therefore, they do not always meet proposals from young and beginning entrepreneurs. Another snag lies in the legislative regulation of the entire entrepreneurial activity. If the system of startups in the West has been developing for more than 10 years, then in the post-Soviet space it only has to go through all the stages in order to embody the development and financing model of each really worthwhile idea.
What is a startup
If you do not delve into the economy, a startup is in fact a start-up company that has good idea for development and in the future can be profitable. However, the nuance of such an organization is that it does not have the proper funding for the full implementation of its project. This is how young firms created by novice businessmen are perceived in Europe and America.
Financing a startup is a complex and gradual process. The problem lies in the individuality of each solution. Depending on the direction of the idea and the business model, investment in it can be full or partial. It is not so rare that several contributors become willing to become participants and share. In addition, it is necessary to draw up an accurate economic model that allows you to calculate all possible risks when investing and stages when the cost part will go to zero.
Russian startups are almost no different from European ones. The only difference is that domestic start-up projects appeared relatively late, which makes it possible to create companies based on the already established experience of Western colleagues. In reality, although each system has common roots, it has great differences due to financial and legislative regulation, as well as the mentality of the entrepreneurs themselves.
Innovative technologies in business development
Startup funding is especially active in new and less competitive industries. The constant modernization of the digital space leads to the fact that new ideas appear in synthesis with information technology and science. More and more in the domestic market, thanks to this combination, there are own software developments.
Computerization allows you to develop your business and increase profitability by new level. It is this industry in startups that is the most attractive for investment. Due to the large number of different types of operating enterprises in the country, it becomes possible to improve the quality of their work by introducing modern systems and automation of many work processes.
Phased development
Funding a startup is a multifaceted process. Here it is necessary to rely not only on future economic indicators, but also for the period of relevance of the idea during its implementation. Often, already at the stage of financing and launching a project, it loses its liquidity, so it is necessary to calculate such a nuance at the planning stage.
Each has its own purpose. Easier and less expensive is the creation of a company and the design of the very future object for investment. It was during this period that a team of young entrepreneurs creates exhibition sample investment model for potential investors and those who want to become a participant in the development of this concept in the future.
Types of investment in the project
Startup financing in Russia has its own characteristics, like any other investment industry. A young business is not without advantages and disadvantages. All investment options are divided by the volume of costs incurred. For example, in order to receive an amount of 1 million dollars (approximately 67 million rubles) for the development of a project, you need to contact business angel communities.
These are successful entrepreneurs whose main task is to invest their own funds in various projects in order to further earn money on the development of new production models and information business. Such an action will allow you to get the opportunity to develop the project to a certain stage. For further promotion, larger amounts may be required, which can be obtained from banks or venture funds.
Financing Technology
Startup funding in Russia needs to be protected by civil law. This refers to a certain type of transactions. This makes it possible to legitimately regulate and give each party rights and obligations. The main type of investment in start-ups is a fan.
The conditions for financing a startup of this type are that entrepreneurs do not invest in a project, but in a business idea. At the same time, the investment amounts are small and are calculated based on the potential profit in the future. Another form of investment is deferred. By the type of action, it resembles a framework agreement, when the amount of money already transferred from the investor is allocated for each stage of business development.
Selection of investors
Financing start-up projects is further complicated by the fact that it is necessary to search for investors on your own. In Russia, online platforms are not yet well developed, where entrepreneurs with free funds select various startup platforms for investing in them. The founders of a young company themselves, based on the required amount, should look for those who would invest in it.
Venture capital funds are one of the most frequent models for investing in young, but profitable projects. However, they put forward a number of serious requirements when concluding a contract. Therefore, it is important to assess all the risks and understand whether it will be profitable to cooperate with such structural divisions in the future, when the company begins to receive net profit.
Promotion through exchanges and the Internet
Startup funding sources can also be found online. This is a more complicated process, but many successful young companies received their first sources of funds through online platforms. There are entire forums and exchanges that are created to connect investors and those who are looking for sources of funding.
However, each online platform also has a number of requirements. It is worth familiarizing yourself with the concept of patents and copyright in advance so as not to become a victim of scammers who promise to invest funds after reading inside information or technological process. Usually, after the transfer of data, such citizens or companies simply disappear.
Getting grants
Financing of start-ups at the initial stage can also be carried out at the expense of the state or regional budget. Large domestic corporations are ready to become investors for many young and ambitious projects. All that is needed is to find the appropriate event and register according to the specified rules.
The form in which the idea is presented may vary. Therefore, it is worth familiarizing yourself with all the requirements in advance. Grants can reach up to 100 million rubles. However, only research institutes that have the opportunity to seriously approach the creation and modeling of the project can count on such funding.
Development loan
How to find funding for a startup if entrepreneurs refuse to invest in it? This is a difficult question. However, banks, noticing the activity associated with the development of entrepreneurship among the young population of the country, began to develop suitable financing programs for them. Large institutions form extended credit limits for business development. All that is needed is to submit a properly designed project.
Funding amounts may vary. It all depends on the assessment of the idea submitted for consideration. It is important to send to the bank not only the model itself future technology, but also to conduct a small study aimed at assessing all possible risks. It would also be useful to have a business plan, which indicates all items of expenditure, as well as the timing of the first profit and the business's exit from a net loss.
Responsibility of the parties
How to spend startup funding and develop the project? Practice around the world shows that young entrepreneurs who have received large funds for the development of their successful project do not always strive to get down to business right away. There are many high-profile cases when startups were closed and their founders disappeared. As a result, they simply stole money and left for other countries, taking advantage of legislative flaws.
Today, however, the financing model has largely changed due to such incidents. positive side. Each of the participants in the transaction has new rights and responsibilities. For misuse Money startup participants can be sued. It is also noted that after several such cases, when unfortunate entrepreneurs received real terms for fraud, the rest became more careful in spending the allocated funds.
What to pay attention to
An investor with full funding for a startup is a fairly rare element of a young project. But there are exceptions. Having formed your own project, you need to find a niche for its implementation. Often successful are cases where young professionals create a separate company to develop an innovative solution for a specific application in another organization. This allows you to find the target audience where the technology will be needed in the future.
When the concept is formed, it is possible to send out offers to take part in the project to all potential consumers of this technology. This will not only draw attention to the project, but also create competition. According to the rule market economy, demand always creates supply.