The venture capital industry is one of the fastest growing in the world. Venture capital investments allow us to develop technological enterprises, and, sometimes, to change entire industries.
How do Silicon Valley investors choose startups to finance? Three aspects are important: is there a real problem that a startup solves; What solution does the company offer? which team will solve this problem.
Most investors believe that a strong team is more important than the idea: the first can always be finalized, but changing the team that will implement it is much more difficult. To turn an idea into a real business, you need several components: a unique plan for the industry, a marketing plan, and most importantly, knowledge of how to find investors and convince them to invest in the project.
At the stage of developing a startup concept, you need money to solve basic problems. To do this, attract personal capital and financial assistance from people who know the founder of the project personally.
But already at the pre-seed stage, to support growth and market testing, when additional finances are needed, startups turn to crowdfunding, acceleration programs and business angels.
Promising startups with a strong idea and a well-formed team can become part of incubators or accelerators. As an advantage, participants in the acceleration program receive mentoring from experts in their industry, strong networking and more opportunities for investment.
Another source of financing at the pre-seed stage may be business angels. Unlike investment funds, which come in the later stages of the project, angels invest in the early stages.
When private investors invest in a company, they get some share. The earlier the investor finances the project, the less money he can invest and the higher the percentage in the share he will receive. Some business angels ask for a place on the board of directors and help develop not only with finances, but also with their expertise.
Where do early stage international investors invest today to show high returns tomorrow?
Firstly, investors pay attention to such technological trends as AI, Blockchain, Fintech, Hardware, Biotech.
Secondly, the importance of forming a balanced venture portfolio and conducting cross-border investment transactions with professional and successful lead investors has increased.
Thirdly, corporate accelerators are actively developing, and corporations need to learn how to work in this market.