04 July 2019
You’ve had a great idea for a new product, so what do you do next?
In this article for Business & Innovation Magazine, we provide some top tips on raising funding in order to develop your business.
Some degree of product design is likely to be needed and you would expect the result of that, in the first instance, to be a minimum viable product (MVP) or working prototype that can be tested and ‘tweaked’ before the design is finalised for manufacture. This is, of course, a very simple description of what can often be a rather lengthy and complex journey which doesn’t end there, and, somehow, needs to be funded until sales revenue starts to cover the overheads.
In general, a new or growing business may (potentially) go through several rounds of funding to raise capital as it progresses along the road from concept to market, and these funding rounds can be broken into three broad categories, namely:
Raising capital can, in itself, be an arduous and frustrating process, but pre-seed funding, in particular, can be exceptionally difficult, because this is the capital you need for early-stage product development of an MVP, testing and finalising the product design. Not only that, you may need to pay for intellectual property registrations, market research, branding, etc. out of this capital, and yet you may not yet have anything viable for potential investors to buy into, nor anything tangible to borrow against.
There are a number of different ways to raise pre-seed funding, and although they are not all covered here, broadly speaking, many startup and scale-up ventures raise their pre-seed capital by one (or a combination) of:
With the exception of R&D tax credits, all successful bids for investment/funding are likely to have one thing in common: getting the message right.
It is rarely possible to effectively do everything that needs to be done yourself, and it is crucial to have an effective core team and good relationships with at least a couple of credible service providers, such as an intellectual property attorney, product designer, branding specialist and marketing expert. It is this network of people that you want an investor to recognise as credible and sufficiently effective to take the business to the next stage.
Su Copeland of Priddey Marketing explains: “It isn’t easy to find the right investors, and doing so requires knowing where to find them and then having an attractive pitch.”
There is no doubt that the start-up journey is long and often complex. It almost always takes longer and costs more than you probably expected, but with the right people around you, and the right advice at the right time, you are much more likely to succeed in the end. Su has provided her top 10 tips below.
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