We are beginning to study ways to obtain financing for large projects. Because we - the people who have no prior relationship to the investment (our projects were financed 100% of the owners of these projects), we will educate themselves and at the same time telling you about it. First, talk about the well-known ways to get investment, and then compare them, and then think about the alternatives. Let's start with the most famous and acclaimed today options - Venture Funds.
So, venture capital funds managed other people's money.
The traditional sources of investment funds in the West - by private investors, investment institutions, pension funds, insurance companies, various government agencies and international organizations.
The vast majority of working in Russia and Russia funds created either directly by international organizations ( regional venture capital funds and equity funds in small enterprises of the European Bank for Reconstruction and Development ) or national, within the framework of intergovernmental agreements.
The task of venture capital fund - to ensure effective investment of funds of the founders fund. In contrast to conservative investors, venture capital funds investing in rapidly growing businesses, often in the early stages of the life cycle. This is associated with some risk, but rewarded with a good return on investment (at least 40 % per annum). However, initially high risks of investing does not mean that venture capital funds and can not deal with the risks. In fact, risk assessment and minimization are a major task managers venture funds. Therefore, to obtain investment from venture capital fund - an extremely difficult procedure, which can take up to 1.5 years.
Investment process looks like this:.
Making contact with the fund (Deal-flow) - as a rule, by filing an application with the business plan.
The study of the proposed project (Due Diligence) - the study of financial reporting, market research, etc. Dr.. And m. n.
The conclusion of the transaction, the signing of the documents (Deal).
Participation in management (Hands-on / Living with company) - a representative to participate in the Venture Fund Board of Directors to participate in the operational management of the company.
The yield an investor out of business (exit).
For the first phase should be easy to find these funds and to fill their application forms. First necessary to prepare a business plan.
The next step - it is turning out just inside the business. At the same time the successful completion of this phase is 90% dependent on how well established personal contact with decision-makers from the Fund.
The conclusion of the deal - the most interesting stage.
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First, the investments can be implemented in 2 ways. The first - an investment in authorized capital. The problem is that if the authorized capital - 10,000 rubles. , For example, and we ask that 10,000,000 rubles. the fund in exchange for a share of 25%, we have to find somewhere to invest, and 29'990'000 rubles. It is clear that it is almost impossible to do so will be sold a second form of investment - investment loan. However, the share capital must be given serious consideration - for the investor an indication of the seriousness and level of financial responsibility of the organizer business.
As for the investment loan - it is issued for terms of payment and repayment, but repayment is effected by the lender shares in the business. That is, in fact, do not have to return it. But interest rates ( from 4 % to 8 % per annum) will have to pay.
At the conclusion of the transaction executed the following documents:.
The agreement between the shareholders (Shareholders Agreement).
Charter (Charter).
The obligation of disclosure (Disclosure Letter).
The first two documents, when they are made by Western lawyers - an impressive tomes, do not abuse the unnecessary references to the ' applicable law '. The latter document - confirmation, signed by all shareholders who sell shares that they faithfully reported all the information that could have a negative effect on the state is now a joint venture with the participation of venture capital (venture-backed company).
If the structure of the transaction involves a mixed form of making investments: in part - in equity, in part - in the form of an investment loan, in this case, the company signed a loan agreement with the organization providing such a loan. Most often in this role are the Western banks that have entered into a special agreement with a venture capital fund (back-to-back agreement - an agreement for a loan in one country or currency, guaranteed by a deposit in another country or currency). To register a company with foreign investment must obtain permission of the Antimonopoly Committee of Russian Federation. For long-term credit in foreign currency must also be licensed foreign exchange regulations of the Office of the Central Bank of Russian Federation.
Participation in management is carried out in different ways, and in the proper organization of this process, both parties are interested. It is important to achieve a balance in which the maximum use of competence and business contacts of the investor, but the company's management does not feel itself bound hand and foot.
During the period of ...
The yield an investor out of business (selling shares) should be thought out in advance. The options may be out selling the company to a strategic investor, the investor's share repurchase organized business, access to public market securities (IPO) and T. Dr.. The yield is 3-7 years after the investment to achieve a real increase in business value and provide a decent return on investment.