How to find an investor. Daniyar Nazaraliev on investment strategies for successful startups

Daniyar Nazaraliev, city — Almaty, investor, Instagram

About myself

I have been in business for 15 years, with the last 6 years dedicated to investing. In 2019, I launched my own startup, secured investments within a year, and then successfully sold the project. Since then, I have focused on investing and supporting young entrepreneurs and startup founders. Currently, we are developing educational programs for investors.

I had my own project, which I launched and spent a long time trying to attract investment for. We scaled it to 36 countries around the world. The project was called Guidebook — it was designed for foreign tourists and investors planning to visit our country. It was entirely in English, and we gathered all the necessary information: about the population, economy, culture, attractions, and investment opportunities. We distributed it through the Ministry of Foreign Affairs, embassies, and major international organizations.

The idea for such a project should have originated from the state, but we took on this responsibility and implemented it.

About investments

One of the important qualities of an investor is financial independence, meaning the ability to cover one's basic life needs. Secondly, it is experience and business acumen that allow for evaluating promising projects and making informed decisions.

According to statistics, only 10% of startups become successful, while 90% fail. Investors, in turn, must be able to assess the prospects of projects in advance, identify potential risks, and understand which ones have a chance of success and which are doomed to fail.

There are many excellent projects, but one of the main problems is the inability of founders to convey the value of their idea. Many think that it is enough to simply talk about their project, and the money will come immediately.

The key difficulty is that startup founders seeking investment often lack sufficient preparation: they do not have well-developed projects, financial calculations, plans, forecasts, and risk analysis. They present ideas verbally, without supporting them with numbers, which significantly reduces their chances of success. Only this year have we actively begun advising entrepreneurs who are seeking investment, helping them prepare for negotiations with investors.

In 2021, we invested in a promising IT startup — a mobile application that we truly believed in. However, over time it became clear that the project was "raw" and not fully developed. The founder lacked the key skills necessary for product development, which led to significant financial and time losses for both parties.

Today, we continue to invest in startups, but we approach the selection much more strictly. Out of 100 applications, we select only 1-2% of the most promising projects.

I have a project that I invested in. It is an IT product called MedLid — a mobile application that we plan to scale to CIS countries. Currently, the app has already accumulated over 150,000 downloads and has successfully launched in Kyrgyzstan.

About strategies for selecting startups

The first thing that is important is to create a test product that will pass validation and be in demand. Such a product is called an MVP. Having an MVP increases the chances of successful evaluation and further development of the project, as it allows investors and the team to see real results and test the idea in practice.

We invest from $100,000 and above. It is important to carefully look at the project valuation to understand its real cost. It is also necessary to consider what percentage of equity the project is willing to offer to the investor. And, of course, the key point is exactly what the money will be spent on. It is necessary to clearly understand whether the funds will go towards development, marketing, office rent, or other needs.

Advice from an investor

It is important to understand that if an investor simply puts in money, they may not have a significant impact on business growth. Therefore, when choosing an investor, it is necessary to consider what they can offer besides finances — their connections, knowledge, and strategic vision. We, for example, first evaluate the team's strategy and only then make a decision to invest.

Regarding preparation, entrepreneurs can turn to us or to other specialists. Before seeking investment, a person in a startup must be as prepared as possible:

1. They must have a financial model of the project and a presentation.
2. It is necessary to clearly define how much investment is needed and when the investor will receive their profit. If a startup founder can present these three key documents — the financial model, the presentation, and the exit plan, for example, how they will invest $100,000 and return $200,000 — then they have a great chance of success.

Plans

Our plans include increasing capitalization. Currently, I am in Kazakhstan, and for the second year I have been building a database of investors, including venture capitalists, business angels, and traditional investors. With each iteration, we are expanding our reach to be able to invest in startups.

What kind of startups do we support? We invest in projects that have been on the market for at least a year. If you have transactions, downloads, or other indicators of success — this significantly increases the chances of attracting investment. And we are ready not just to provide money, but to fully support the startup, investing our knowledge and experience, as well as increasing investments several times if we see potential.