Three mistakes novice VC | Предприниматель

Three mistakes novice VC

What to look out for investing in startups?

Overabundance of positive expectations

Invest Advises Director fund Mint Capital, Kirill Veselov. Experience in the company – six years on the board of directors, “Monet”, “A-Dept ‘and’ JCB ‘,’ companies that are part of a portfolio Mint Capital.

“The most popular mistake novice investors is overpriced potential cases and increased optimism. Of course, there must be confidence in the entrepreneur, but it should not be a bias in the estimate of future profitability of the project. The purpose of the client – to get money for the business on which he relies. Your goal as an investor – to make a profit for the money invested. For an unbiased assessment of the project at the stage of entry will have the opportunity to optimize business processes right from the start.

With all the experience in the work of our experts, too often the case re-evaluation of potential projects. Because of these blunders workload increases significantly, up to participate in the invested company.

To minimize risks, we advise to apply to funds that distribute your money in various projects (five lines). The more diversification, the higher the probability of success. Of course, it is necessary to take into account the size of commissions for managers and other investors to share in each project. If you are doing without the mediation of investment funds, prefer a well-known lines of business for you”

Small portfolio of projects

Top-manager of Microsoft’s Pavel Cherkashin invests in three years. The most successful of two dozen of his projects can be considered Toonbox, Copiny, Tvigle, Krible and ID East.

“In investing it is impossible not to make mistakes. In the first year is no longer up to half of my projects. But the experience of such blunders, I think, too, a valuable acquisition”

“I often get on the purchase of empty promises and over-estimate the potential entrepreneur. The enthusiasm of a businessman is almost impossible to buy, much to the chagrin of investors. Bad entrepreneur is easier to talk to us favorable conditions, it is easier to control. And with a really good businessman work much harder – can not do without the headache, stress and numerous concessions. But the effectiveness of their activities and, consequently, did not differ in the amount of profit for a few tens of percent, and in a couple of thousand times.

Another common mistake can be considered as a small portfolio of projects. Western venture capital funds use the model of “limited partnership”, which is necessary for the insurance of the misconduct of their own investors. When investing money in only one project the investor may get carried away too controlling its operation. A desire to make the business work, even when it is complete failure. And with good diversification (from 10 different projects) can reduce risk by focusing on sustainable and effective projects – it is there and should be sent to other funds”

Attempt to seize the initiative of an entrepreneur

Managing partner of Almaz Capital Alexander Galitsky themselves engaged in investing in 9 companies:

“Man, just started investing, it might seem something of a gamble. But an effective investment management involves work around the clock seven days a week. Work startup investor – this is the work of an experienced nanny for a newborn child, and the money – it’s not all that he puts into the project”

“Common mistakes, I think the creation of business for the sale, transfer of control of the business, trying to get a larger share of the business, overstated the company hopes to take off, the example of Google, and so forth.”

Personally, I am most inclined to take risks. I prefer to invest in projects ahead of their time, which is extremely risky and often brings disappointment.

As a board novice investors stick to the personal balance. An investor should not replace the entrepreneur, working on the subject of investment. If you wish to participate in more activities invested project to look at the startups. If the time and effort to actively invest no more correct to refer to the venture capital fund”

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