Presentations For Financing Your Product
You've got an idea. You're excited to develop it into a product and make your fortune and indelibly making your mark on the world. You've been told it's a fantastic idea worth millions - and maybe it is! How do you go from idea to market?
Most entrepreneurs know, or at least have the resourcefulness to find the path of how this is done. A written concept with either a set of clear renderings can start the ball rolling. This can be followed with a good business plan or a Private Placement Memorandum. A more aggressive approach would be to make a great video presentation like the better ones found on Kickstarter. A prototype or at least a works-like model may be part of your presentation alongside your renderings that show it's visual attractiveness.
Starting from just an idea requires the promotional tools described above to attract any sort of financing. For this, I don't need to tell you that your idea has to be new are original, that it solves a problem or is so unique that it could revolutionize an industry. However, you should also be aware of your idea's scale, its growth rate and potential for profit. It must also be timely, up to date. People with investment capital are looking for these types of opportunities and will invest should your idea be of this ilk and your presentation looks professional.
A sound business plan provides the investor with the confidence that you know what you're doing and where you plan to be at a chosen future date with the funds. I don’t recommend someone doing a business plan for you. Doing the business plan by yourself will reveal many things you may not have anticipated and is a great teaching effort.
A good business plan also provides the visibility of reasonable approximations on the return for anyone's investment including yours. This can either excite you or scare the motivation right out of you. I say, don't let any of that intimidate you after you've presented your idea, plan, renderings and prototype. An investor may want ten times their investment because the ratio of success in what they invest in is somewhere around 1 in 10. On the other hand, the best thing is to finance your idea yourself if that's all possible. Should an investor ask for one of your arms, one of your legs and a first-born son or two, don't hesitate to test how you do at the bargaining table. If your idea, presentation and profits are sound, the investor will flex a bit just so they don't pass up what could be a big payoff.
The attrition rate of investors seeing your presentation is pretty high. Of approximately 200 investors that see your PPO, you expect that to dwindle down to about 5 to 12 by the time funds are offered - even though you have a killer idea. Investors also look for intellectual property attached to it. Whether it's an allowed patent, patent application, or just a provisional patent application, it's a good idea to always have intellectual property to add interest and value.
Also remember, as a rule of thumb, that investors invest in what they know. They don't stray from their comfort zone. The investor that is into medical products will not invest in a toy and vice versa. Always target investors that are in the field of your invention.
Investors may appear impatient. That's probably because they have so many people vying for their attention. You should be able to get a clear story across in less than a minute. If you present in person, showing 10 to 15 slides in that amount of time is about all they will sit still for. This will include clear illustrations / graphics of your product, marketing data, competition studies and financials. If they are still interested, you won't be shown the door and you should be ready to answer questions. That's just the early part of the process.
Now you've got the initial investment you were looking for. What? Initial money? Yes, initially many startups are fat and happy renting an office or fabrication space, purchasing tooling and materials, hiring people to get production moving and learning how expensive a sales/marketing effort actually is. There are desks, computers, quality control equipment, a Manufacturer's Resource Planning effort, copy machine paper, lights, gas, water and on and on. On a different scale, after initial investment money, you might still be in the product development stage with a big project that requires a huge effort before you go into any sort of production such as a new type of power plant that takes garbage and turns it into electricity. That's when you soon realize, even though you've come a long way, you need a second round of funding.
That's when your pie gets its first split. This is a basic funding concept. An initial venture that starts out as 100%, depending on how it's split with your first investor(s) is your equity. As investors add value, equity grows, and your ownership dwindles. This is not all that bad. Take Bill Gates for example, who started out owning 100% of Microsoft, then by 2014 he only owned about 4%. However, this 4% was worth about $76 Billion and made him the richest man in the world. Not bad for a college dropout.
When you get as far as a second round of funding, you will have learned more than most people will know in a lifetime about how funding works.
Good luck in your endeavors!