Introduction: The Core Topic
The critical problem with the scenario is attracting more investors, and it is necessary to present projects in such a way that they look unusual, interesting, attractive and promising. Even if a company has a project with excellent prospects, investors will not be able to understand this by looking at the numerous graphs, charts and calculations that display pricing, probabilities, risks, and stages of product development. After listening to a presentation about the project, investors will have to make a responsible decision and agree to certain risks. In such a situation, any doubt is not in favour of the project, and investors refuse to deal. Investors can think for a particular time over the proposals received. However (especially given the large selection of projects and startups), this process will not be delayed.
Initial Data Collection
Even though investors in the scenario are interested in the financial side of the issue, one should never forget the importance of the product. The quality and relevance of the product (according to investors) motivate them to invest even at high risks. The psychological aspect of people’s spending is that they are willing to put up with costs and threats if they are convinced they need a product. Television advertising has always dealt with this aspect, making viewers ignore the possible dangers of buying and presenting the idea that the advertised product is necessary. However, honesty should not be forgotten; people need to consider the product’s or project’s possible disadvantages. Being caught in a lie, investors will not want to cooperate not only with a specific project but with the company, as well as its prominent persons.
How to Find a Balance?
Investors are interested in the financial side of the project as much as it comes into contact with their direct role in it. Demonstrating financial statements requires educating investors about percentages and numbers and how spending has affected the product. One of the most critical aspects of the correct presentation for investors is using decision trees or binominal trees (He, 2019). If decision trees are suitable for classical product manufacturing, then binominal trees will help investors make decisions under uncertainty. Binominal trees will help investors, for example, price bonds when interest rates are unclear. Interest rates often fluctuate and move up or down, which significantly impacts securities.
Know Your Investors
Knowing information about investors will be the key to their trust and goodwill. Do not get too deep into the calculations if investors are not in awe of the product. Before creating measures and analytics of assets and liabilities, it is necessary to investigate the history of investing. Each investor has a unique story that reflects what areas he trusts and understands. It can also show which products the investor is not interested in and which he does not consider promising, essential for modern business and society as a whole. Knowing what they trust and do not, it will be easier to provide reports to influence their future decision. In addition, seeing the author’s awareness, investors will pay special attention to the product.
Risks
The importance of discussing risks has been repeatedly mentioned above. Warning about adverse outcomes will prepare investors and other stakeholders of the project for difficulties (Leach & Melicher, 2020). Concealment of risks can at least become a cause of conflict and loss of trust and reputation, but sometimes such actions can turn into a lawsuit for a company. Presenting risks, the author can smooth out sharp corners so that investors do not get hung up on the negative aspects of a project or startup. It is proposed to discuss favorable outcomes in parallel with the risks. Visually, this can be achieved with the help of flowcharts, which, on the one hand, will demonstrate the risk of financial losses and the amount of this money and, on the other hand, show the potential income under favorable circumstances in the market or with the introduction of innovative technologies.
Conclusion
Thus, the considered scenario requires a balanced work on the presentation of financial statements.
References
He, T. (2019). Nonparametric predictive inference for option pricing based on the binomial tree model [Doctoral dissertation, Durham University].
Leach, J. C., & Melicher, R. W. (2020). Entrepreneurial finance. Cengage Learning.