Gražvydas Balčas, CEO of "FinoMark," spoke at the "My Investment" conference about how to become an investor in 20 minutes. He highlighted three popular ways to invest in business: brokers and funds, personal investments, and platforms. "Each of these options is a valid way to start investing, but it's very important to understand their differences and the challenges you will face," says Balčas.

Advises to Evaluate Certain Indicators in Advance

When choosing investments related to brokers, Balčas suggests using the tools offered by the largest banks in the country. Additionally, he notes that foreign brokers' representatives in Lithuania can provide such services.

"My impartial advice is to always think and set in advance how much and for what period you plan to invest. The amount is really important, as some brokers require an 'entry fee' from which you can start participating in this activity. When you start investing through brokers, fees will be applied, which can significantly reduce your planned and desired returns over the long term. Consider this and evaluate it," Balčas shares his observations.

According to the speaker, you can also look for brokers abroad, but it is very important to ensure that those offering such services are stable, provide proper service, and most importantly, have low fees. For those who want to invest through funds, Balčas notes that a slightly higher entry fee will be required, ranging between 50,000 and 125,000 EUR.

Investing in Crowdfunding Platforms

Personal investments or investments in businesses require significantly more time and a higher risk tolerance: you will need to assess the viability and sustainability of the business yourself. Furthermore, according to Balčas, businesses often tend to overestimate their capabilities and may not necessarily use borrowed funds appropriately. "If you plan to invest in company bonds, consider that you will usually only be paid interest during the entire period, and the principal amount will be returned only at the end of the term," advises the CEO of "FinoMark."

The third investment option is platforms: According to Balčas, crowdfunding platforms in Lithuania have very clear evaluation and return indicators, helping to decide whether such "rules of the game" are suitable for the investor.

"Crowdfunding platforms allow for a quick exit: in other words, withdrawing money from the platform is quick, and loan periods are usually short. The platform also has a secondary market where you can sell investments and recover your funds," the speaker shares about investing through crowdfunding platforms.

Investor Security and Assurance Measures

According to Balčas, crowdfunding platforms operating in Lithuania are strictly supervised by the Bank of Lithuania, ensuring that investment funds are safe, often separated from the platform's activities, with particular attention to transparency.

"Crowdfunding platforms clearly evaluate and select company owners, their projects, and provide this information in detail to you as investors, with which you can familiarize yourself, analyze, and evaluate all criteria. You can even contact the platform for additional explanations or discussions to ensure that the company operates sustainably," says Balčas.

When choosing a crowdfunding platform, the expert suggests considering the annual return needs, potential project delays that can adjust annual return indicators. Additionally, Balčas advises paying attention to the company's team, experience in a specific type of activity, the stability of the platform you choose, and communication with investors.

"One of the most important aspects that will determine your investment return is the platform's assurance measures. Some platforms are even 'built' on certain assurance measures. 'Finomark' has four assurance measures for investors: personal guarantees, company guarantees, collateral of property complexes, and real estate collateral," says Balčas.

Furthermore, according to the speaker, in the future, it is realistic to expect state guarantees in crowdfunding platforms, which will further increase investor security. "Regarding assurance measures, I would like to mention that the state also participates in some cases by investing through crowdfunding platforms. Personally, I think this is a fairly significant plus," shares Balčas.

Advises Deciding on the Tolerable Risk

How to effectively choose what suits you as an investor? Balčas suggests not only setting the desired return percentage but also evaluating the risk of the business that needs investment. This risk is usually expressed in letters, where A means low risk, and the riskiness of projects increases thereafter.

"Determine the term, which, depending on the investment strategy, often becomes an indicator of how your funds will return to you. In most cases, our project duration is up to 36 months. We call these short-term investments, where funds are returned faster than long-term ones.

There are both pros and cons: short periods allow for quicker fund recovery and further reinvestment. Some value it one way, others another. In conversations with investors, most note that shorter investments are safer for them. Why? I don't know the answer, but it seems to be the case. Long-term investments have their plus: you fix your percentage, which you receive for the entire period. It could be a 5-year loan. I would say this is a plus when we don't know what the financial situation will be."

Talking about "FinoMark's" goal, Balčas emphasized the aim to grow and help grow Lithuanian business, achieving goals together. "So far, we are speaking quite cautiously, but we have a long-term 'FinoMark' operational strategy, where we want to see ourselves among banks, credit unions, and all other alternative lenders. I believe we will succeed and be able to offer flexible and good conditions to finance various types of businesses quite quickly and professionally." All businesses applying for loans through "FinoMark" must have been operating for at least 12 months and provide financial and general vision proving stability now and in the future.

Will Teach Financial Literacy

Currently, mostly small and very small companies approach crowdfunding platforms operating in Lithuania, but according to Balčas, soon foreign companies may appear here as well, which should open up even greater opportunities to diversify the investment portfolio.

"Platforms operating in Lithuania disclose a lot of information about companies requesting funding, allowing for a deeper understanding of the company's situation and assessing their ability to manage finances. Our chosen strategy is to disclose as much information as possible to the investor and at the same time educate investors on how to accurately assess company risk because I believe all investors should evaluate this sufficiently," says the expert, adding that seeing the company's balance sheet and profit/loss statement makes it easier to decide which business is most worth investing in.

"Before making an investment in business loans, familiarize yourself with the company's long-term and short-term assets, equity indicators, company revenues, inventories, and expenses. We understand that not everyone wants to delve into and has enough knowledge to read profit, loss, or balance documents. Therefore, after consulting with our board members, we decided to invest time and contribute to the promotion of financial literacy," the speaker shared at the conference, inviting to a series of seminars starting in 2022 on the Delfi+ channel, where Balčas, together with "NEO Finance" board chairman Evaldas Remeikis, will explain how to read documents reflecting the company's financial situation. The knowledge that experts plan to share during the seminars will help understand the key points to pay attention to when analyzing a company's financial indicators."