Traditional private equity paradigms can go against the principles of venture capital in many ways. Entrepreneur Derek L. Bittar identified seven major differences between venture and traditional investors.

What most investors don't realize is that traditional investment paradigms don't need to be applied to venture capital investments. The typical problem in new ecosystems is that the classic private equity paradigms are still in place, and no one is implementing the best principles of venture capital.

Successful venture capitalists are not afraid of failure. In just one day, a startup can completely transform its business model, because such complex decisions need to be made as quickly as possible. Therefore, management must be ready for change. Even more than that, quick course corrections should be part of the day-to-day work of a startup. is one of the most popular tricks of any successful startup.

VCs understand that startups have to make decisions quickly and flexibly in order to capture markets, destroy old segments and create new ones.

Short investment cycles

The traditional investor seeks to invest in the growth of one company over several years.

Venture capital operates on a shorter time frame (12-18 months per cycle) and involves subsequent rounds of investment.

Large companies plan long periods of growth and ensure positive cash flows for this. They take out loans to pay operating expenses and keep their cash flow going in the long run. Share capital increases in response to external circumstances to cover costs. In other words, what is bought with shares must be tangible.

Startups, on the other hand, rarely have a positive cash flow, and even more rarely generate profits. Thus, they do not have to rely on borrowed funds, and the only way to finance the growth of a startup is through equity investments. The funds are used for operating expenses and to achieve certain milestones that will help to carry out the next rounds of investments.

Venture capital is used to cover operating expenses and achieve short-term goals in order to move on to the next investment round.

constructive approach

Traditional investors hold positions on the board to control the development of the company.

Venture capitalists hold positions on the board to be as useful to the startup as possible.

Traditional investors prefer to influence strategic decision making in companies. They invest in the business they see as promising, without regard to the ability of the current management. These executives are often replaced by those recommended by the investor. If these performers do not cope, others are found in their place.

From the point of view of a venture investor, such a policy can hinder the development of a truly promising business. Instead, they choose to invest because they believe in the ability of the founding team to realize their vision. Venture investors practice a constructive approach. Even if they have their own position on certain issues, they trust the vision of entrepreneurs and leave the final word to them.

Successful VCs establish governance rules that give startups the opportunity to experiment and lead the company to exponential growth.

Competition and cooperation

Traditional investors often compete with each other for the right to make a deal, and sometimes even conflict within the board of directors.

Venture investors believe that it is possible to cooperate with competitors for the benefit of a startup.

Traditional investors rely on their ability to find opportunities that others don't. Therefore, transactions are concluded in conditions of strict secrecy and bureaucracy, requiring the signing of non-disclosure agreements, letters of intent and other documents. Negotiations usually take place in an aggressive manner in order to avoid the appearance of "undesirable" players.

Venture capital investors are also in no mood for competition. However, the spirit of cooperation and coexistence is also prevalent in this industry. Often, different investors join forces to increase a startup's chances of success. From time to time you can see that venture investors are really proud that they were able to attract one of their colleagues to the deal. Moreover, often, to save time and money, no one signs a non-disclosure agreement, and paperwork begins already at the stage of an agreement of intent.

Competing VCs may cooperate if it is to the benefit of both parties.

Good day to everyone who gathered in front of the monitor screens and got ready for the next batch of news from the world of moneymaking! As you remember, I wrote about how risky business is a game in such a financial market as Forex. Today I want to devote my article to an even more risky event, namely, venture capital investments. If you are busy looking for ways to diversify your funds, then this will be useful and interesting for you. Therefore, I propose right now to find out what venture investments are, how to work with them and how not to lose your capital.

What is venture capital investment

If we turn to the origins and delve into the roots of the origin of the term venture, then we learn that in translation from English it means nothing more than risk or undertaking involving risk. Based on this, we can draw a completely logical and logical conclusion that venture capital investment is an investment associated with high risks.

It seems to me that for a better understanding of this term, it would be very appropriate to compare it with a loan. You and I know that the latter is issued to companies without any specific guarantees, for the most part, simply under "honestly". The role of investment objects, as a rule, are young enterprises that are just starting their business activity.

How ventures work

It is thanks to venture investments that they are being realized, which literally blow up the markets. For clarity, I suggest you decompose this process in the form of an algorithm.

At young company yet no sufficient funds, but there are already serious and very ambitious goals for which it needs investment. To get the missing resources, she attracts investors to her project.

Those businessmen who are interested in the offer of a newly-fledged company allocate the amount necessary to finance the project from their own funds, and in return receive a share in the company. In other words, investors buy their place in the management of the firm, become the owners of its shares.

After this, events can develop in two directions:

Due to the fact that this area of ​​investment is highly risky, many venture investors decide to manage projects on their own, relying on their experience and acquired business skills. The people called such active investors "business angels".

How venture capital works

In order for you to understand the principle of venture capital investment, I suggest that you decide on main distinguishing features, which are typical for this financial instrument.

Fairly high barrier to entry

Most often, investors in the venture capital market are more than wealthy individuals. This is due, first of all, to the fact that this industry requires investments ranging from 10,000 to several tens of millions of US dollars.
Therefore, you, as a novice investor with modest capital, will have to go through many sites on the Internet, watch hundreds of commercials, re-read a bunch of forums, before you finally find the right one. interesting and affordable project for you requiring investment. If this option does not suit you, then I advise you to contact the institute or who provide such a wonderful service as the opportunity joint investment.

This will allow fund managers to accumulate the contributions of several small investors in such a way as to further invest the collected capital in a strong and promising project. The only disadvantage of this option, I think, is that you will have to fully trust the competence and experience of the fund manager, give up the opportunity to independently make decisions regarding which project to direct your funds to.

Long-term investment

When investing your money in venture projects, you must understand that the conditions for investing this kind will not allow you to return your funds at any time you wish. This is due to the fact that the entire amount invested in the project is immediately absorbed by the company, and therefore you can return the money spent only when the project begins to generate income. Often, until the moment of receiving profits and the opportunity to return the invested funds, some years.

Lack of control

If we compare venture investors with strategic partners, then such a striking difference immediately catches the eye as the lack of control over the block of shares by the former. That is, these entities are practically not interested in managing the company itself, they assume only the risks of the financial plan, shifting all other chores onto the shoulders of top managers.
Of course, in an effort to save their money, some venture investors still sit on the board of directors of the company and personally control the affairs of the company. That, in principle, in my opinion, is quite logical. It is unlikely that any of you will agree to part with huge amounts of money and not worry that at any moment all these funds can simply “burn out”.

The impossibility of guaranteeing the profitability of the project

Throughout the life of a venture loan, you, as a lender, may not get a single penny of return on the project, and ultimately sell your stake in the company for tens of millions of dollars. The real profits of most startups can be discussed only after their shares are publicly placed on stock exchanges. After that, based on the investment attractiveness of the project, it determines the price of its shares, and with it the amount that you can get for selling a share in the company, being its direct creditor.

Stages of provision of venture investments

Since any financial investment is a deliberate and balanced undertaking, investors choose very carefully where and how to direct their funds. It is for this reason that it is so popular phased investment model is the strategy most demanded by venture investors for investing in high-tech projects. Its essence lies in strict time limits– stages of development of the funded event, weighing and comparing these stages with the key stages of the development of the company as a whole, which are previously negotiated with investors and carried out in the process of their implementation with financing.

Each of the stages has its own individual investment sizes necessary in order to achieve the set goals. Total stages 6, and I suggest you talk about each of them in more detail:

1. On pre-sowing stage there is an allocation of a certain amount of funds (very modest) for a supposedly profitable idea for a clear justification and elaboration of the general concept, conducting marketing research and developing a direct product.
2. seed stage involves the financing of deeper and more thorough research, the release of trial batches of the product.
3. First stage. It is at this stage that the direct development of business and release of the first commercial batch product.
4. On second stage, in the event that at the previous stages all the funds raised have already been exhausted, there is a repeated cash injection aimed at increase in production turnover and the creation of a certain food stock.
5. Only on third stage finally starts profit flow. It is this stage that is characterized by continuous and rapid development of the project as a whole and significant increase in the rate of sales. Only if both of these requirements are met can a company qualify for the new investment needed to improve products and increase production.
6. Late and final stage of development- is direct listing a company on the stock exchange. At this stage, investments are needed for various purposes and are "beaten off" after specific proposals are received on the exchange regarding the acquisition or sale of the company's securities. It is at this stage that investments become the largest in terms of their volume, but the risk of losses is minimized.

A little about real success

Let's take a short break and let's have a rest. To inspire you to invest in the world of venture projects, I want to tell you a couple of real stories about how investing in once unknown small companies gave the world the most famous and most popular brands. So let's find out how venture capital hyped whatsapp And Twitter.

Where can an investor look for projects for investment

If I managed to convince you of the attractiveness of venture capital investment, then it's time to talk about where a beginner can find a project in which to invest? I will list the most available search methods investment objects that I know about:

Summary

In conclusion, I cannot fail to say once again that such investment is associated with huge risks so I ask you again carefully weigh all the pros and cons this type of income. Remember that making such decisions requires you to understand the legal side of transactions, consult with specialists who have been working in this area for more than a year. You must clearly understand that only a tenth of investors recover their costs and make a profit. But even if this does not scare you, then my advice to you is to invest in several projects and diversify your risks. See you here, see you soon, my dear readers and novice investors!

If you find a mistake in the text, please highlight a piece of text and click Ctrl+Enter. Thanks for helping my blog get better!

Hello, dear readers of the financial magazine "site"! Today the subject of our conversation will be venture investments used to finance new or growing companies, as well as talk about venture funds and investors- professional participants of venture business.

In this article we will consider:

• The concept of venture investments and their scope;
• What are venture funds and how do they work;
• The main stages of the venture investment process (information for investors);
• Features of attracting venture capital (information for start-ups and aspiring entrepreneurs);
• list of the best venture funds in Russia.

This article will be helpful:

• entrepreneurial investors who are ready and not afraid to take risks by investing money in new ideas and projects;
• “newbies” in the field of doing business who do not know where to start and what niche to choose;
• persons who are not yet familiar with entrepreneurial activity, but who have an innovative idea and lack of funds for its implementation.

So let's get started!

What is venture capital investment and how venture funds work, how can an investor make money on venture (risky) investments, what are the features of attracting venture capital for a startup - you will learn about all this and more by reading this article to the end

1. What is venture investments - definition + overview of promising sectors of the economy for venture investors

Term "venture" borrowed from English, denoting "risk" or "risk start" . Venture capital investment does not bring instant profit to its investor. Such are long-term And high-risk .

Venture investments- these are risky investments in promising innovative companies () in order to obtain significant (above the market average) income.

The risk is that money is invested in absolutely new ideas, technologies or product. Will bring it lesion or profit will only show the investor time. In the event of a loss of a new enterprise, the investor simply loses his invested funds. But in case of success, the investor receives excess profit, that is, much more than the investment.

At the initial stage, the investor makes his investments in a new business, and when the enterprise reaches a sufficiently high level of profitability and development, he has the opportunity to sell his part (share) in the company at a higher price. That is, the growth in the value of a share (share) of a company owned by an investor is his main source of profit.

Venture capital income = cost of realizing a share (shares) – amount of money invested

P.S. Venture investment is not always an investment in the authorized capital of a company; in rare cases, such financing can be in the form of loan.

Venture investors can be both individuals and large organizations and corporations, as well as syndicates and funds, regardless of their field of activity.

5 most attractive sectors of the economy for venture investments

Sectors of the economy in which it is profitable to invest money for venture investors

The most attractive sector of the economy for attracting venture capital investments are information technology, internet, software, mobile communications and telecommunications. In this sector, entrepreneurs are ready to invest big money in new developments and innovations.

Healthcare, pharmaceuticals, biotechnology are of greater interest in the West than in Russia. But recently there has been a trend towards increased investment in this sector.

Industry and construction are not developing as fast and dynamically as the previous two sectors. Such areas of the economy are considered inert and conservative, but at the same time, they have the ability to bring large profits for risky people.

By the way, on our website there is a separate article that details about, as well as the best start-up areas in Russia where you can invest money.

What is a venture fund and what is the scheme of its work, in whom do venture funds invest, and what do experienced investors earn on - read on

2. Venture fund - what it is and how it works + comparison table of venture financing and bank loans

Let's define the concept of "venture fund".

Venture fund is an organization that invests in new, innovative and young projects.

The activities of venture capital funds are associated with high risks, but also with high potential profits.

Venture funds can be:

• specialized who invest money only in a certain sector of the economy or region
• universal working in different areas.

As a rule, venture organizations invest money in several projects in order to differentiate risks.

According to statistics 70 % of the objects of financing are unprofitable, but the rest 30 % bring significant profit covering all risks.

In whom do venture capital funds invest:

• into projects or business ideas that need additional research or product try-outs before entering the consumer market ( seed);
• to new companies that are new to the market and need research and development to bring their products to market ( start up);
• to enterprises that already have their finished product for commercial sale ( early stage);
• in companies that have been on the services market for a long time, but need additional funds to increase working capital and fixed assets, increase production and research volumes ( expansion).

Venture funds are created, as a rule, by experienced entrepreneurs - financiers, which work like this:

1. Search for innovations, ideas, new companies with potential high profitability.
2. Analysis of selected companies for profitability, development, economic feasibility and possible risks.
3. Development of ways for the development of the company and potential and new markets.
4. The issue of shares of the enterprise (the controlling stake, as a rule, is owned by the head, and the fund is only a small part of them).
5. The development of the company, which in turn leads to an increase in the value of shares and assets.
6. Earn income for investors from dividends or from selling their shares already increased in price.

The last stage is the final, since it is on it that it is determined whether the cash investments will bring the income that the investor originally expected.

Why do new companies with new ideas choose a venture fund and not a bank loan. There are many advantages to this.

For example, get a significant bank loan for a new idea, even with a profitable and far-reaching business plan, almost impossible. But by contacting a venture fund, you can not only attract investments for the development of the project, but also take advantage of training programs, mentorship of more experienced entrepreneurs, and preferential loans.

Comparative characteristics of venture funds and bank loans are shown in the table below:

Venture fund	Bank loan
Refundability
Pledge
Share in the company	Property or guarantors
Payout conditions
Tranches upon reaching a certain level of profit or from the sale of shares	Fixed monthly fixed payment with interest
Participation in the development of the company
Yes, as the investor is personally interested in this	No, as banking institutions are only interested in the return of their funds
Opportunity to receive money for startups
Terms of refund
There are no clear deadlines, it all depends on the complexity and implementation of the company's idea in life	They are stipulated in advance in the contract, and non-compliance with them leads to the accrual of penalties and fines.

Thus, summing up, we can say that attracting venture capital investments will bring the company not only money, but also support at different stages of development and promotion of a product or service.

3. Venture business: the concept and features of venture activity + successful examples

So what is a venture capital business?

Venture business(from the English. Venture business - a risky business) is a risky and long-term business in the field of investing in innovative (sturtup) projects.

Usually, venture organization (fund) it is a team of investors who work together and with sufficient experience to achieve maximum profit.

Features of venture business:

1. The return on investment is from 3 to 10 years(up to 5 years, research work and the release of goods can last, and after that they are promoted on the market, making a profit).
2. Venture investors are initially preparing to withdraw their invested funds when the company reaches a high level of development.
3. Often the objects of investment are not companies and projects, but People who promote ideas and have already had successful experience in the past.
4. The investor is personally interested in the successful development of the project or company, therefore he supports the company's management as best he can in the form of consultations, recommendations, research and support.
5. In this type of business the risks are very high, because it is impossible to predict the development of the company with accuracy, since there are no analogues so far, but the profit as a result is maximum in comparison with other types of investment.

An example of competent business conduct by venture funds:

The amount of money invested (in USD)	The cost of selling shares at the exit (in USD)
Messenger whatsapp
250 thousand	16 billion
Twitter service
5 million	15 billion
Oculus virtual reality device
250 thousand	2 billion

As you can see, the profit significantly exceeds the amount of invested funds, which is the main goal of venture funds.

4. Stages of venture financing

Venture funding - it is highly risky in promising innovative business projects in the early stages of their development. It has several stages of different duration.

Start-up capital

Investing in market research and marketing

Start-up capital

Financing of pre-development to start production

initial growth

Advertising financing, search for customers, markets, self-sufficiency is still zero

Rapid growth and expansion

The transformation of the company into a joint-stock company, the purchase of ownership rights to another company or its transfer under the control of the company

Redemption at profit

The company's management decides to buy it from the current owners

Property Conversion

Some owners or management of the company buy out all its outstanding shares and again transform the company into a private company.

The ultimate goal of venture capital is the company reaches the stage of liquidity, that is, the stage at which the company is able to place its shares and securities on the stock markets and receive income.

The duration of all stages depends on the type and specifics of development.

A step-by-step guide to making money from venture capital investments

5. 6 main stages of venture capital investment

Whether the business will bring profit and success to the investor depends on many factors, and most importantly on your actions. Actions must be clearly systematized in stages and accurately performed only in the sequence presented below.

Stage 1. Raising initial capital

This is the initial stage, because when a person starts to implement a project, you need to have at least the necessary initial capital for the first time. The investor can finance partially, and fully development and implementation of a project or idea.

Stage 2. Determining the vector of investment development

At this stage, it is important to study the situation in the stock market. About how and how it works, we already wrote in the last issue.

Perhaps you will find a free sector of the economy for your project or company, or find out that you have an innovative product that has not yet been presented on the market and will definitely be the first.

Stage 3. Search for a promising business and drawing up a plan for its development

A project for future development has been selected, now it is important to stop and think, analyze all the risks associated with the activities of the enterprise. And only then proceed to the development of a development plan and its implementation in order to obtain the maximum benefit. This may require the transformation of the company from private V joint-stock.

In one of the articles of our magazine, you can read about, or download ready-made examples of business plans.

Stage 4. Signing the contract

You have discussed the financial component, now it is important to deal with legal matters. In this matter, it is worth giving preference not to financiers, but to lawyers qualified in this matter in order to avoid disagreements in the future.

Stage 5. Control of the enterprise's activities

Venture investors are personally interested in the successful outcome of the company's development. They not only invest money, but also directly control the activities of the enterprise.

They take an active part in the process of developing the concept, planning, defining new directions in activities. Also, venture investors, as qualified specialists in this field, provide advice on various issues and give useful advice.

Stage 6. Sale of company shares

When a company reaches a significant financial position, makes a sufficient profit, investors begin to think about selling their shares. These shares are bought by other investors who prefer work that is not associated with high risks.

Attracting funds from a venture fund for a startup project

6. How to raise venture capital for a startup

What is venture capital? Let's define this concept:

Venture Capital is the money of investors who finance startup projects(young promising companies).

A typical venture capital organization (fund) receives more than 1 000 requests per year for financing start-up projects, of which 90 % is immediately eliminated. Reasons for deviations may be inconsistency geographical, technical or market policy venture company, as well as illiterate business plans, requests and documents.

Most venture capital companies work with those projects or ideas that require an investment of from $250,000 to $1,500,000

Remaining 10 % are subjected to careful and costly research on various parameters. To do this, companies hire consultants to evaluate a product or idea, especially if it is new and innovative.

This review focuses on the following:

3 important parameters for checking a startup project

If a venture capital company conducts such research, spending significant amounts, it means that it is interested in the idea or product. Companies are also screened out at this stage, and only some, with which the investor is ready to work and risk his own money.

The process of attracting venture capital for a startup can be reduced to 4 main and very important stages for obtaining guaranteed financing.

The process of raising venture capital - 4 main stages

The most important factor for a potential investor is availability of qualified personnel of the company who are competent in the given field of activity of production. The responsibilities of each must be clearly stated. And as a guarantee of the interest of the company's managers in obtaining maximum profit, they must be co-owners of the company.

As for the market or niche that your innovative product is ready to fill, then there is a direct link: the more market you intend to conquer, the higher the chances of getting financing. This is noticed by the investor and strengthens your competitive advantages over the rest.

Important also objectively evaluate and describe all possible forthcoming litigation, difficulties in obtaining a license, especially for a new product. That is as carefully as possible approach the analysis of future costs associated with the activities of the company.

The share of venture capital in the company may fluctuate from 10% to 80% if the company has insurmountable financial difficulties. Usually, part of the investor's shares does not exceed 30 %, since the owner must have an incentive and personal interest in the development of his company.

7. Where to look for venture investors for new projects and ideas - 3 best options

It is important for a beginner not just to find like-minded people who believe in his product or idea, but most importantly those people who are able to invest their money in its development and promotion on the market.

Few beginners have sufficient funds to create a company on their own, so the age-old question arises where to look for investors. There are several options here:

Option 1. Friends

Most likely, the novice entrepreneur does not know millionaires, so the search is carried out among the closest circle of the environment. The more you talk about it, the more likely it is to be heard by a potential investor who is ready to believe and invest in your idea.

Example! Ian McGlynn, an ordinary motor vehicle salesman, invested 5,400 euros in the business of his girlfriend Anita Roddick, who opened the Body Shop natural cosmetics store, in exchange for shares in the company. The company subsequently expanded to 2,000 stores and was bought by cosmetics giant L'Oreal. Ian McGlynn's net income was approx. 180 million euro

Option 2. Project exchanges or forums

Forums are held in different parts of the world and in different countries, which attract many potential investors with one goal, looking for new ones to invest their own money.

You can also use the Internet and portals of investment projects. They contain a lot of useful information, it is possible to place your project or idea and find a sponsor or wait until he comes to you. The most popular portals are startup.ua and inproex.ru.

Option 3. Crowdfunding

One of the options for collective investment is working online. This is a service that specializes in posting ideas and promoting your projects.

The number of participants is kept to a minimum:

1. The author of the idea;
2. Curator;
3. Sponsor.

Curators There may be various organizations that have an interest and are willing to support the project. Support should be understood as the financing of advertising to promote the product, the provision of equipment and technical means.

Crowdfunding platforms include all product information:

• the required amount;
• description of the idea in the form of photos and videos, that is, a presentation;
• terms of achievement of profitability;
• availability of rewards;
• information about the author and his bank details.

Depending on the service, the platform cooperates with different payment systems.

Most of the resources are social and they can be accessed using the Internet and a valid account.

The user has the right to track the activity of other participants, to receive information about projects created or financed by him. It is also possible to communicate with the author of the project or idea that you like.

8. Well-known venture funds in Russia - list + review of TOP-5 companies

The birthplace of this risky type of financing is considered America , But in Russia such a view, one might say, has always been present. An example of this would be different developments in the military-industrial complex of the country. Initially, only thanks to venture investments, this sphere of Russia reached such heights. Although the investor in this case was the state, and not individuals and companies.

As for other areas of the economy, initially even the most promising projects in Russia were invested only foreign investors. But today, they have formed and successfully function fully domestic venture funds .

There are about 20 venture funds in the Russian Federation. Here is a list of the top 5 venture capital funds in Russia:

1. Runa Capital (8.5 points);
2. ABRT (6.5 points);
3. RVC (5 points);
4. Russian Ventures (4.5 points);
5. Softline Venture Partners (4 points).

These venture capitalists were evaluated according to the following criteria and received the corresponding scores:

• the number of startups financed by the fund;
• the amount of funds invested or planned to invest;
• middle part in invested projects;
• share growth rate.

Estimates of the activities of the TOP-5 Russian venture funds

Now let's look at these domestic venture funds in more detail. (let's take a look at them) .

Venture fund №1. Runa Capital

The founder of the fund is a Russian entrepreneur who willingly and competently invests in startups in the Russian Federation - Sergey Belousov. The success of this fund is based on knowledge, experience and marketing.

Belousov's startups have won the competition from The Next Web.

In general, thanks to a competent policy and support, the brainchildren of this fund are successful (Rolsen, Parallels, Nginx, Jelastic, LinguaLeo).

from 20 % before 40 % , and investments reach 10 mln.

Venture fund №2. ABRT

The fund was established in 2006 Andrey Baronov, Ratmir Timashev and Nikolai Mityushin. Their main area of ​​interest lies in innovative developments in the field of software.

The properties of this fund is its willingness to invest not only in a startup in the development process, but also in the stage of growth and expansion.

During the development process, invest up to 4 million dollars, taking 20 -35 % shares of the company, and in the process of growth and expansion - up to 15 million dollars in exchange for 15 -30 % shares.

Successful fund projects are Acronis, KupiVIP, Oktogo.ru.

Venture fund №3. RVC (Seed Investment Fund)

This fund is state-owned in the field of innovative scientific discoveries. A feature of this fund is not too intrusive policy in the field of company management, but in order to receive funding from this fund, you will have to carefully prepare the documentation, because it works together with a venture partner.

The share that the fund receives for funding is 25 % .

Notable projects include Wobot, Ceramic Transformers, Membrane Technologies.

Venture fund №4. Russian Ventures

The fund was founded in 2008 Evgeny Gordeev. Initially, this fund was created in the form of a club. The founder of the fund is a professional in the field of information technology and is well versed in the peculiarities of the Russian consumer of this market. The startups that this fund selects for itself are adapted in concept and climate to the Russian market.

Since 2011, a new vector has been developing - investments in projects at the prototyping stage. The redeemable share is before 20 % and the amount invested 35 thousand dollars before 500 thousand dollars

The principle of operation of this fund and its founder is flexibility and speed in making a decision (up to 30 minutes).

Well-known and successful projects are Pluso.ru, Okeo, Ogorod.

Venture fund №5. Softline Venture Partners

This foundation was founded in 2008. Its capital is 20 mln. And has 13 projects. His specialization is startups designed for the domestic market, at the initial stage of development, up to the level of expansion.

In 2015, the fund signed its largest deal in terms of value for 7 million rubles of investments in the Business Family offline network.

Successful projects are Mirapolis, ActiveCloud, Daripodarki, Magazinga, Client24.

9. Frequently asked questions (FAQ) on the subject of publication

Let's take a look at some frequently asked questions.

Question 1. Who are business angels and how do they differ from venture investors?

business angels- These are single entrepreneurs who invest their capital in starting projects.

The first "angels" appeared at the beginning of the 20th century. These were theatergoers who invested their money in new productions and received income only if the performance was successful.

Now business angels are entrepreneurs who have experience based on the successful development of their own business. Statistics show that it is mostly men ( 99 %) who have higher education or a doctorate degree and solid experience in management. And every fifth of them - millionaire. (In one of the articles in our magazine, read about how, from scratch - the advice of billionaires will help you achieve your goal).

The priority interests of business angels are information and high technologies, and intelligence. They get their profit from the sale of already increased in price shares of the company.

The principle of operation of business angels and venture funds is almost the same, as they are both aimed at the final result, but there are differences.

Comparative characteristics of business angels and venture investors:

Business angels	Venture investors
Source of funds
own funds	attracted capital
The amount of investment in one project
up to 1 million dollars	up to 5 million dollars
Project location
important	less important
Management style
informal	sufficient high level of control
Monitoring
active and detailed	strategic
Number of transactions per year
1-3	15-18
Attachment Format
primary financing and practical knowledge and experience	a large amount of money, help in building a team and knowledge of the field of activity

As we see the differences minor. Another property of business angels is that it is easier and easier to attract them to cooperation than venture organizations.

Projects of business angels who have achieved significant success: Intel, Yahoo, Amazon, Google.

Question 2. Whom are venture funds ready to finance?

Over time, the areas of interest of venture funds have also changed. If earlier, until the middle of the 20th century, the most attractive sectors with the highest returns were commerce(oil, weapons, drugs), maintenance of gambling establishments, etc.. Now interest for venture organizations are high-tech sector, telecommunications And healthcare .

Venture funds can have both narrow specialization, so be it all-encompassing depending on the volume of investments and strategy. They are not tied to a specific region.

Also, funding by such organizations occurs not only at the stage of formation and launch of the idea, but also at the stage of expansion and growth.

Venture investors are not passive in the field of company management, because they are personally interested in successful development. Therefore, they use all their available experience and knowledge to advise companies at all stages of development.

Question 3. How to start investing in venture business?

Venture business This is a very risky activity, but at the same time highly profitable. There are special professional communities that teach how to run this business. The main focus is on search, choice, evaluation And financing specifics selected project.

Before investing in venture capital, it is important to decide on the main key points, such as:

• Studying the literature on venture business which will help to understand the main aspects of the activity;
• Amount of capital which you are ready to invest (here, experienced venture investors will advise you to diversify risks and focus not on one project, but on several);
• Scope of investment(it is important to choose the one in which you have practical experience and knowledge, so it will be easier to control and analyze the activity, since the sector is familiar to you).

If you do not have the necessary amount of money and lack experience, you can turn to a professional venture fund or business angels who will do all the work for you.

10. Conclusion + video on venture financing

The venture business, without a doubt, even despite the high risks in financing projects, is quite a popular and attractive business in the world, since only it can bring excess profit investor. It is also a kind of "life stick" for new ideas and innovations. It is important to understand its basics and nuances, for this we wrote this article.

Our site project team hopes that this material will help you make the right choice and potential investor, And novice startupper. Good luck to you in all your endeavors!

If you have any comments or questions about the topic, then ask them in the comments below. See you soon on the page of our online magazine!

Venture investments are a special kind of business financing, which involves investing in a new company at the initial stages of its existence. As a rule, risky investments are called venture investments, in which it is impossible to calculate what potential profit can be extracted. Now I will try to intelligibly describe what it all means.

When an investor finances a young entrepreneur who is just about to build a business, he is engaged in venture capital investments. In this case, the investor receives a share in the new business, but does not know for sure what the real value of this share is, because there is no business as such yet. Investments can both pay off and burn out, so the risk they have is quite high. In comparison, if we buy a stake in an existing company, then we can say with more confidence that these shares can later be sold, having received our money back. With venture investments, the sponsor cannot receive any guarantees of the safety of his investments. The entrepreneur he finances can either build a profitable business or throw money away without making enough profit and go bankrupt. Next, you will learn about other features of venture investments, how they are beneficial and why they are not beneficial to both the investor and the entrepreneur. You will also learn about who is involved in such investments and what alternatives there are for investors.

Key features of venture investments:

1. Financing of the enterprise is carried out at the earliest stages, when the authorized capital has not yet been formed. Quite often, the first cash tranches are received even when the legal entity is not registered. At the same time, it is not the real indicators of business profitability that are taken into account (they simply do not exist yet), but a business plan drawn up by a start-up (aspiring entrepreneur).

1. With venture investments, the investor receives a share in the company, which is fixed by a special agreement. Subsequently, if the business makes a profit, the sponsor will be entitled to a part of it, in proportion to the share. This very share, by the way, is determined not so much by the size of investments as by agreement between the parties. There are times when the entrepreneur himself does not invest anything in the business at all, or his investment is minimal. Most of the material costs are borne by the investor, but he does not receive most of the share (over 50%). In such cases, it is believed that the investor invests money in the business project, and the entrepreneur invests his intellectual work.

1. The entrepreneur does not bear any obligations to his investor. If the business goes bust, it should not return investments. Thus, the investor himself imposes all the risks, and if his faith in the success of the entrepreneur turns out to be erroneous, he will lose his money.

1. As a rule, venture investments are the ways to bring the maximum profit commensurate with the risk. If the business is really successful, in the future it is able to bring a multiple increase in the funds invested in it in a short period. For this reason, many capital holders are investing in startups, because only 1 successful project can cover 9 unsuccessful ones with its profit. If the investor himself is also an experienced businessman, then he can determine with high accuracy whether a business project is capable of generating income or not.

1. Venture investments are not only traditional investments in authorized capital, in which the company that received financing has no obligations. In rare cases, they are also in the form of a loan (interest-bearing or interest-free). At the same time, the company is obliged to return the funds invested in it after a certain line. Despite all this, venture capital investments in the form of a loan are still considered risky, because LLC is liable only within the limits of its authorized capital. If these funds are not enough to repay the debt, the latter will be written off, and the investor will suffer losses.

1. The investor is personally interested in the success of the business, so if he is an experienced entrepreneur, he can also take part in the management of the company, or act as an unofficial adviser. As a rule, cooperation between an investor and an entrepreneur goes beyond formal agreements, they can mutually help each other, jointly come up with various ideas, make plans, etc. This is considered more efficient from a business point of view and can bring good results.

1. When a capital holder invests in the shares of an already existing company, he most likely wants to seize a controlling stake, or just a significant share. This is necessary in order to get a significant voice on the board of directors and influence company policy. You can use this influence in different ways: to develop another business, a political career, etc. As for venture investments, as a rule, there is no question of acquiring a controlling stake. The investor sets himself a single goal: to invest in a promising business and make money on it. The management of the companies takes place by agreement between the parties. Sometimes decisions are made jointly, and sometimes all management is concentrated in the hands of an entrepreneur - the author of a business project. There is no rivalry between partners, they work for a common goal - the maximum expansion of the business.

1. In the first few years of a new company's existence, dividends are usually not paid. All funds are used to expand the business, and only when the company occupies a significant place in the market does the gradual distribution of profits begin. Of course, sometimes there are exceptions, with each business project the situation is individual.

What is the difference between venture investments and shareholding?

Shareholding, or strategic investments, is the financing of already existing companies, the purchase of part of their shares (if it is an OJSC), or the contribution of authorized capital (if it is an LLC). In general, venture investments are quite similar to strategic ones, but there are some cardinal differences:

• Venture financing goes at the earliest stages, while strategic financing goes to an already existing corporation.
• Venture investments are associated with greater risk than corporatization. Shares, although they can sink in price, but the probability of their complete depreciation is significantly less than the failure of a business project.
• With strategic financing of a company, large investors aim to capture a controlling stake, and with venture financing, they simply want to buy a share of the profits in the future business.
• As a rule, more capital will be allocated for strategic investments than for venture capital investments.
• The potential profitability of venture investments is many times higher than the profitability of strategic ones. So, for the shares of even the most promising company, you can receive no more than 25% of the package value per year, and a successful investment in a startup can increase the invested money several times over the year.

Venture investments - is it profitable or not?

For an entrepreneur who is just starting out in business, venture capital investments are the best option if he does not have his own investments. At the same time, he personally does not receive any obligations to the sponsor, cooperation is based on mutual assistance and work on a joint project, and not on a bunch of agreements that clearly regulate the duties of each. Of course, at the same time, the entrepreneur is forced to give away part of his business, but it is still better than not being able to build a company at all due to lack of capital.

And what about the investor himself? Is it profitable for him to invest in startups? In general, yes, because it gets a number of opportunities and perspectives, but there are also disadvantages. Now I will briefly list all this.

Benefits of venture capital investment for an investor:

1. The return on investment is maximum if the business project is successful. There have been cases when an innovative business brought its owners about 1000% of the profit in relation to the initial investment in just a few months. If you find just such a project and invest in it, you can earn a decent amount, and in the future become a partial owner of a large company.

1. To acquire a significant share in the business, you do not need to lay out millions of dollars, a relatively small amount is enough to start. For some investors, it is better to have 50% in a young project than 0.005% in a large company.

1. Venture investments, in addition to money, bring useful experience related to the business field. The investor learns a lot about promising projects, which may be useful in the future.

Disadvantages of venture investments for an investor:

1. These investments are associated with great risks, because not every entrepreneur brings his project to the end, many do not withstand competition and go bankrupt. Thus, if you decide to finance someone, say goodbye to money in advance, because in many cases the new company does not bring any profit.

1. Some startups are scammers who have nothing to do with the business. They can make a colorful presentation, then ask to transfer money to their account, after which it will be possible to look for start-up "businessmen" somewhere in Cyprus. To avoid all this, it is necessary to sign an agreement with your partners before transferring money, which will indicate all the nuances of cooperation.

Who is involved in venture capital investments?

1. The most common venture capital investors are individuals. In the business world, they are called business angels, because they part with money quite easily and can finance a risky project. Most of the investments go bust, but the "angel" is rarely interested. Often, he has another permanent source of income and decent capital, and he invests in startups for the sake of prospects.

Also, the “angel” sometimes happens to be acquaintances or relatives of the entrepreneur, hence such a willingness to part with money and believe in a business project. However, there are times when a business angel invests in a completely third-party business, simply being interested in the idea. As a rule, they are attracted by innovation and an unconventional approach to entrepreneurship, they will not invest in banal projects like a grocery store or a hairdresser.

1. Now there are so-called venture companies, or venture funds. They professionally invest in startups, but in turn are more reverent about their investments. In order to secure financing, an entrepreneur should describe his project in detail, present a business plan, cost estimates and potential profitability. Just an idea is not enough, a venture company needs certain guarantees.

As a rule, such organizations prefer to finance successful entrepreneurs who have already had experience in building a new business in the past, and now have a new idea. If a businessman is young and inexperienced, it will be very difficult for him to get investments, he needs a “bomb” idea and a detailed presentation of a business plan.

1. Sometimes entire companies of various kinds of activity, in particular large joint-stock companies, are engaged in venture investments. This happens extremely rarely, but it still happens that a large company finances a smaller one, receiving a large share in it, after which it uses the new business for its own purposes.

1. The state can also finance a business project, but from the experience of my business acquaintances, I can say that this is more expensive for myself. You have to complete a bunch of bureaucratic formalities, stand in line at various authorities, present your business plan in detail, and don't forget about bribes either.

These were the most frequent venture investors. Of course, business angels are in great demand among entrepreneurs, because they do not require special presentations of a business project, and also do not seek to capture a large share in the company. But to find such a person and interest him is not so easy. As a rule, everything goes by acquaintance, or you must have an innovative business plan with great prospects (or better, both). To put it simply, the steeper the scope, the higher the chance to attract investments from "angels".

Alternative investment!

In addition to venture capital investments, there are many other ways to invest money wisely. In particular, I can mention financial exchanges, where I personally have been trading for 15 years, investments in real estate, stocks, bonds, etc. If you want to understand this issue in more detail, as well as choose the right method of investment for yourself, I recommend that you read the following material:

In general, venture investments are a pretty good way to invest free money that you don’t mind losing. With good luck, you can become the owner of a share in a promising business, with all the ensuing benefits. But you should also take into account the risks, which are quite high here.

To the end!

Let's sum up all of the above. Venture investments are a special type of investment with great prospects and risks. As a rule, people with extra money are engaged in them, I am not afraid of losing a large amount, but hoping for a huge potential profit. You could familiarize yourself with all the features of venture investments above. As you can see, the option can bring results if you approach it wisely and choose a worthwhile business project for financing.

All success and prosperous life!

Sincerely yours, Victor Samoilov!

There are many types of investment, differing in terms, industries, properties of capital. One type of investment is venture financing of projects (). What is the peculiarity of this type of investment?

Venture investment belongs to the group of high-risk investments. The essence of these financial injections is that the money is invested in the authorized capital of developing enterprises that are engaged (or are going to be engaged) in the development of high-tech projects.
Large companies that receive stable profits are not interested in investors of this kind.

Structure of venture investment

As already mentioned, this type of financing refers to long-term investments with high risk. All that interests a potential investor is newly created small and medium-sized businesses, whose main task is the development and implementation of new technologies. Of course, provided that these technological solutions will be in high demand in the market in the future. The goal of the investor is to make a profit several times over the money invested in the project in a few years.

Naturally, venture financing is not available to all newly created companies. There is a fairly clear ranking of enterprises that may qualify for funding:

1. The first are organizations that have a ready-made idea in their assets, but do not have the funds for subsequent research work.
2. Newly created companies with ready-made technological developments, but not having the opportunity to establish a trial release of the product.
3. Enterprises whose products have already been tested and are ready to launch products on the market.
4. Operating enterprises with ready-made technological solutions, launching their products on the market, but in need of financing. Cash infusions are needed to expand the scope of activities, develop new technologies, and conduct additional research.

This classification does not guarantee that all companies that meet the listed data can immediately receive venture financing. In fact, investors are not looking for potential partners. To receive financial injections, it is the newly developing companies that must themselves look for an investor. How does this happen? By searching through acquaintances, friends, the Internet. What you need to provide to the investor: a decent business plan with a development strategy for several years ahead.

If many aspiring entrepreneurs think that with such a business plan you can go to the bank and get a loan, they are greatly mistaken (by the way). The time when such schemes worked remained in the nineties of the last century. Today, not a single bank will undertake to finance a high-risk project that does not guarantee solid profits at the initial stage. Venture investment, while similar to bank lending, differs precisely in that the investor is ready to take risks and invest in such a project.

The investment scheme is quite simple and transparent. Venture financing of investment projects is carried out as follows:

1. A small business with an innovative project approaches a potential investor. The purpose of the enterprise is to obtain financing for the development and implementation of high-tech solutions that can ensure constant demand in the market. At a minimum, such an enterprise should interest the investor not only with an innovative idea, but also with a competent business plan.
2. If the investor is interested in the proposal, the details of future cooperation are discussed. Financing can be carried out by injecting cash into the share capital of the company or in the form of loans (for a long period at a minimum percentage). At the same stage, the distribution of future profits is discussed. Features of venture financing are that a potential investor is interested not only in an innovative project that should be financed. Investors pay much attention directly to the organization of the enterprise. After all, it is competent management and the correct distribution of the funds received that ultimately affect the work on the introduction of new technologies.
3. After the company takes a leading position in the market, the liquidity of the shares increases, and the profit increases, the time comes for the distribution of income. For example, an investor can simply sell his stake to the company at the end of the project (provided that they rise in price). In general, a project can be considered profitable if it is possible to make a profit of 20 to 50% in about 5-7 years after the start of investment.

Types of investors

There are two main types of venture capital investors:

1. Venture funds, which are formed with the assistance of several investment funds.
2. Business angels, that is, single investors. Roughly speaking, this category includes large entrepreneurs.

Venture funds have at their disposal accumulated (total) capital, which is distributed among investment projects. All members of the fund are divided into two categories:

1. The main partners who control and distribute financial flows. The share of the main partners in the venture fund is no more than 20%.
2. Limited partners who directly invest money in the fund, but do not have the right to dispose of the funds. Their share in the fund can reach 80%.

Venture funds, in turn, are divided into:

1. Specialized, which finance only in a certain industry or in a certain region (country).
2. Universal, which diversify financial injections into completely different industries.

Venture capital funds finance a wide variety of companies at different stages of their existence. Such organizations willingly invest in companies that have just opened or in enterprises that are just planning their activities (seed investment). But preference is given to still existing companies that have a ready-made and tested project, the so-called start-up companies. If an existing enterprise plans to expand the scope of activities and enter the market with a new offer, the venture fund will certainly finance such an undertaking.

Today, there are a large number of corporate funds on the market, which unite many small organizations and companies operating in the field of innovative technologies under their wing. The merger of diverse companies enables corporate funds to minimize possible risks by diversifying investment interests.

Now about the so-called business angels. These include large entrepreneurs or wealthy people who carry out venture financing of the same small enterprises and newly created companies. The difference between business angels and venture funds is that the process of obtaining funds from individuals is much faster, the terms of repayment are gentle, and the interest on invested capital is lower than that of funds.

Venture investment risk

Since the main point of investing is to place finance in the equity capital of the organization, the most important risk can be called the possible illiquidity of shares in the future. In a word, where there is a turnover of shares, there is always a risk of shortfall in profit or direct loss.

A venture investor finances an enterprise whose shares are not yet listed on the stock exchange. The peculiarities of venture financing are that such projects are designed for a long period, so it is almost impossible to predict the possibility of making a profit at the initial stage. It all depends on the intuition of the investor himself. Moreover, the investor often cannot withdraw the money invested in the project until the end of the contract.

The risk is also due to the fact that this kind of investment is always aimed at the development and implementation of new technologies, often quite unusual. Such projects, of course, can bring a decent profit, but there is also a high probability of failure of the developed idea.

Venture capital investment is similar to bank lending. The only difference is that the interest in investing is much higher. But this is balanced by the fact that there are no guarantees in such an investment.

Venture investment in Russia

Although it is generally accepted that America is the birthplace of this type of investment, venture financing was almost always present in Russia. The most striking example is developments in the military-industrial complex of Russia. It is thanks to venture financing that the country's military complex has reached significant heights. Naturally, the investment was made not with the support of private funds and individuals, but directly from the state budget.

An attempt to create venture funds in Russia was made back in 1994-1995. For a number of reasons, the development of private investment for the introduction of innovative technologies in Russia did not find a proper response. Venture financing in Russia was carried out by funds that had in their composition the majority of capital of foreign origin. Simply put, the developments successfully brought profit to Western investors, or even went abroad. The reason is the weak material and technical equipment and the lack of tax incentives for Russian enterprises that introduce advanced technologies.

Today, the problems of venture financing in Russia lie in the wrong approach of the investors themselves. The main snag is that the Russian economy is currently not stable, it is not entirely correct to talk about projects that can be implemented in 5-7 years. In addition, funds that could invest funds demand from Russian enterprises not only fresh technological solutions, but also well-established production. Simply put, in order to receive funds from the fund, you need to show the results of the finished product, which has received encouragement from a wide range of buyers. With such an approach, the very idea of ​​venture investment simply loses its meaning.

However, given the presence of many people with high scientific and technical potential, one can hope that there will also be business angels who are able to adequately evaluate the proposed business projects and promote the development of new technologies through venture financing of small enterprises.