Despite the current progress in the venture capital business in Russia, in addition to the above, there are many other problems. The main problems include: the impact of the general situation in the global venture capital business, the problems of Russian companies – applicants for venture capital investments and the problems of venture capital investors in the Russian market.
The situation in the global economy and the recent collapse of the so-called “new economy” of advanced countries forced investors, including venture capitalists, to tighten the requirements for applicants for funds.
At this stage, investors prefer projects with low potential, but moderate risk, from which it is easier to “exit”. Investments in such projects belong to the category of “short” money, the return of which is expected in 2-3 years. But the profitability of such investments is also low, compared to investments in high-tech companies, where the return can be expected only in 5 – 7 years against the background of low market predictability and results.
This is the trend around the world now, which is why the most difficult situation is for companies – applicants from the field of high-tech.
However, such strict requirements imposed by investors on companies, in turn, may become a “boomerang” and in response to deprive investors of promising business, and thus profit.
Problems of investment applicants and venture investors in Russia
The experience of the leading venture funds and the Russian Venture Fairs has shown that there are not many companies ready to meet with an investor, and they still need to learn to represent their business with dignity.
There is a lack of training for the management of the applicant companies. For a venture investor, the personal and professional qualities of company managers are one of the main criteria for selecting an investment object, since qualified management is an effective indicator of reducing the investor’s risk.
Training of company managers – applicants should be focused not only on commercial aspects of project promotion, but also on a specific methodology of work with venture investors.
Applicants need to learn to prove that their company has a real niche in the market, a working team, protected intellectual property rights, professional management, a clear understanding of the prospects for business development and how the investor’s money will “work”.
Today’s Russian “applicants” are often not ready for open relations with the investor, which reduces their prospects. In turn, a venture capitalist needs to thoroughly study the history of the company’s creation, as well as analyze the creation and emergence of property rights in order to become a co-owner of the business, not to make unpleasant discoveries.
The combination of risks now makes venture capital investors prefer to invest in companies that are in the “explosive expansion” stage, although the venture capitalist may enter the business at an earlier stage of its development. This situation makes it difficult for the applicant companies to enter the market, asking about the sources of funds for development at an early stage.