Creating a startup and starting your own business is a long and time consuming process. After developing a viable business plan, it may turn out that there is simply not enough money to implement the project. The Page learned how to find an investor for a startup, what tools are available and why it’s not enough to just come up with an idea.

How to find an investor for a startup

The main rule, regardless of the tool for finding and attracting investment, is to carefully prepare a proposal for an investor or fund. You need to prepare not only the pitch, but also the business. Presenting a business that already works will attract investment.

Funds and private investors are very interested in specifics. They do not need to know how great the startup will be in many years, it is important for them to know how the project works now, what are its real figures.

The second no less important focus is communication. It is not necessary to agree with every decision or proposal of the investor, but it is necessary to consider why he proposed it. If you build communication with the investor, the chances of obtaining financing increase.

There are many ways to find an investor for a startup. We will consider the main ones.

Investor (passive investor)

Such an investor uses the Asset Alocation investment strategy

The investment strategy became widespread in the world in the 80s and 90s of the last century. The founder of this strategy is Harry Markowitz (“Portfolio selection” 1952: “Portfolio Selection: E ffi cient Diversi cation of Investment” “1959). For this he received the Nobel Prize in 1990.

Asset Allocation is an investment strategy that seeks to balance risk and return by adjusting the percentage of assets in the portfolio depending on the timing of the investment, the investor’s goals and its resilience to risk and other personal indicators.

Substantive provisions.

• Risk (in addition to profitability) is an important factor in creating a portfolio
• Risk can be measured mathematically
• Risk means volatility (price fluctuations)
• Much attention is paid to the proper distribution of assets and diversification

This strategy is based on the choice of investment funds

Benefits of Asset Alocation

1. Time costs are minimal.

2. To master this strategy, the investor must have basic knowledge in the field of investment.

3. The stakes are on the economy as a whole. When an investor buys a fund of 100,500,1000 companies, he relies on the economy as a whole. He does not pay attention to individual companies (fundamental analysis) and the timing of buying or selling (technical analysis).

Disadvantages of Asset Alocation

1. Average return.

Buying a share of the fund is reminiscent of buying fruit in a group. The fruits of the group are mature, immature and rotten. Similarly, the fund’s share will contain promising, profitable, as well as unprofitable and stagnant in the development of the company. market.

2. A large number of funds

As of January 1, 2021, the number of mutual investment funds in the world was 126,500, the number of exchange-traded investment funds ETF -7,602. You can easily get confused when choosing funds for a portfolio.

This strategy is suitable for most investors who are not willing to devote much time to finding and choosing individual investment instruments. Investors should not forget and take into account when creating a portfolio of personal indicators:

• goals, priorities
• resistance to risk
• term of investment
• client’s investment experience
• age
• the amount of capital
• frequency of investment
• customer obligations
• personal preferences

As for the Asset Alocation strategy then

If you need more information related to this topic, we’d suggest you to focus on the following topics related to investments:

• How to understand the variety of American ETFs and choose what you really need.
• How to form a quality investment portfolio in accordance with the goals, investment objectives and your own risk appetite?
• How not to lose your head during financial crises and know what to do.
• How to choose a broker to invest without problems?