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The biggest concern of any inventor/founder is: how do I finance or fund my business? Funding your business allows you to hire employees, build your product, market your idea, or pay for legal services. There are many popular methods to attract funding to a startup or to earn the necessary capital needed to further your business development. We outline those opportunities here along with some unconventional ideas.
Crowdfunding:
Crowdfunding is a popular choice these days as you do not have to raise from traditional investors and it validates your idea via a public campaign. There are two types of crowdfunding: rewards based, and equity based crowdfunding. Rewards based crowdfunding like kickstarter.com or Indiegogo.com is where you structure a campaign for an allotted time, and take pre-orders for a product that will be delivered at a later date. Equity crowdfunding platforms such as startengine.com or www.wefunder.com is where you raise capital from the “crowd” of investors in exchange for a small percent ownership of your company. Each type of campaign requires a lot of work upfront and also a lot of planning.
Pre-orders:
The best way to validate your idea and generate revenue to fund the product development are pre-orders. Similar to crowdfunding but the advantage of going it on your own is escaping the fees that crowdfunding platforms charge. This works well if you already have access to or have a great strategy to reach your potential customers or an existing relationship through another business.
Family and Friends.
Family and friends are a great place to obtain the capital you need to develop your product. Now, it goes without saying, having a good relationship with the family or friend is key and also giving the investor a reasonable deal and reasonable expectations is key. Only take the money from your friends and family if they can live with a long term repayment schedule and do not need the money in the near term.
Generating income from side or freelance jobs.
With the growing popularity of freelance job sites generating income has become much easier and more attainable. If you have a great set of skills that are needed and of course the time then this is a great way to earn the extra cash needed to fund development of a proto-type.
Accelerators or Pitch Competitions
Startup accelerators are fixed term programs that include classes to educate inventors/ founders and mentorship from seasoned business professionals to help inventors/ founders plan and build their business strategically. The accelerator may also provide an investment or grant to the startup at the beginning or end of the program. Pitch competitions come in different varieties from competitions that give grants to startups, mentorship, or services. A simple google search can uncover these opportunities in your local area and are a great way to fund your product and business development. Each competition or accelerator has their own set of requirements for you to comply with and in order for your company to be considered.
Angel Investors or Venture Capitalists
Angel or VC groups were created to help you raise capital for your startup and further your business and product development. This option depends on the stage of development you are at in your business journey as each group has its own specific requirements. As always, a lot of research is needed up front and a strategy to raise from specific investors. It always helps to research the investor you are interested in to see if they invest in your type of product, when they invest, how many companies they invest into, or what stage are the companies that they invest into. It is always helpful to find someone that you know that the Angel Investors or Venture Capitalists has either funded or knows to give you a reference with the group you are applying with.
If you have a great idea and you need help protecting it, Menlo Park Patents is here to get it done with affordability. Contact us today and tell us about your awesome idea.
