Stereotypes slow the business down, preventing us from taking risks, finding partners and making progress. But the reality has long changed: today, one can start investing with a modest amount; a crisis is an ideal moment for a bold move; your business partners are not your enemies, but an opportunity to grow.
Myth 1: Investing is only for the rich
True, 1% of the population owns 45% of all assets, as confirmed by Global Wealth Report 2023. However, today one can enter the market with just a small amount. Accounts on the Moscow Exchange start from 1,000 rubles (about $10); on foreign platforms, from $50. In crowdfunding, the threshold is even lower. You can literally invest in startups using your pocket change.
The pooled investment market in Russia tripled between 2020 and 2023, while the global market grew seven-fold. The my-idea-is-not-enough kind of thinking is truly misguided. Various funds are willing to invest even in small projects with an ROI at 20% per annum.
Myth 2: Investors will target your business
Fears of an investor trying to take you over are largely outdated. In 2023, 76% of stock transactions in Russia had a transparent structure and involved fairly small shares. Aggressive takeovers are a myth from the past.
Businesses ruin their own chances to grow by refusing to go public. In fact, solid preparatory work is everything: do due diligence and be protected. Investors want the company to grow; they are hardly interested in taking it over. All you need to do is figure out the rules of the game and use them to your advantage.
Myth 3: Debt is better than partnership
In fact, loans only benefit banks. In 2024, the average cost of borrowing for small businesses was 13.5% — try to compare this with the venture capital market, where investors are willing to wait five or seven years and take risks. Entrepreneurs are driving themselves into a corner by directing half of their profit to service their debt. Instead, they could have found a partner and doubled the size of their business.
Let’s take a business with a turnover of 10 mln rubles ($95,700). Having borrowed 5 mln rubles for business development, the company will be paying the bank about 750,000 rubles ($7,180) annually in interest alone. Over the same period, a venture partner will not only contribute the funding, but will also assist with marketing, share expertise and use connections — and ultimately ensure a 100% growth of your business.
Myth 4: Investment is not for times of crisis
Stability periods are an illusion. All the world’s largest corporations made their bold moves in the midst of crises. Uber and Airbnb emerged in 2009, when the economy tumbled to a critical low, and now they are worth $95 bln and $80 bln, respectively.
In fact, the coolest opportunities might open up when others start freezing projects due to instability.
Myth 5: Only dividends show success
Capitalization growth is more important than quick payouts. Tesla does not pay dividends but over ten years, its worth has grown more than 100 times. While businesspeople chase quick money, investors choose projects with a long-term potential.
Dividends are nice but capital growth is better. Long-term investment reduces risks: S&P 500 has shown an average profitability of 9.8% per annum over 90 years. Do you want even less risk? Diversify and research your market. The fear of loss usually comes from a lack of knowledge.
Investment myths stall your business. Money will not work if it is not included in the turnover. You don’t need to be a guru: even Warren Buffet made mistakes. Learn the basics, choose a strategy and get going. In 2023, 70% retail investors started with simple tools like state bonds and funds. They did not read hundreds of books but made a move, which is more important.
By Yevgeny Khodchenkov, investor and founder of the League of Investors