Financing of Prototype
How to finance a prototype?
Getting the funding to develop a prototype is one of the great challenges faced by Inventors.
Although in most cases we think that obtaining a patent is enough to sell the idea, the truth is that this scenario is very far from reality. Private investors invest neither in ideas nor in patents. To present to raise financing, you must have a your working prototype and a business development strategy.
En Let´s Prototype, podemos ayudarte a conseguir financiación para lanzar tu proyecto. Si quieres descubrir cómo financiar un prototipo o vender una patente, en esta página obtendrás toda la información necesaria.
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Where to get funding to launch a Prototype?
Professional investors or big brands are unlikely to trust your invention at the first stage. Proposing your invention to investors, before you can prove that your idea works, through a your working prototype, is too risky and has little chance of success.
Crowdfunding platforms are virtual showcases where entrepreneurs and inventors expose their projects so that private investors can assess the possibility of participating in their businesses. Unlike loans, private investors who invest in inventions and projects through this type of platform, do so non-refundable, knowing the natural risk of any process of starting up a new business. In Let's Prototype we have experience preparing the necessary documentation so that your invention can be exhibited in these portals, in the same way, we maintain close collaboration relationships with managers of Crowdfunding platforms.
Although we all know the drawbacks of applying for a personal loan, the truth is that other people's funds are cheaper than your own. For certain projects and investment processes, it makes more sense to have a personal loan requested from a bank than to offer shares of your future business to other individuals. There is no doubt, the profitability required of an individual will always be greater than that offered by a bank with a packaged financial product.
There are several public aids for the development of innovative projects. The truth is that these aids do not qualify all kinds of inventions, they are created for very disruptive technological principles, in some cases, far from the business. These aids are managed through very slow processes and in most cases, they translate into tax aid for companies already created and that arrive when the company has benefits, or aid that requires the Inventors to advance 100% of the investments and then return a percentage of them.
Financing for Inventors. How to get started?
The launch cycle of an innovative product should be seen as a relay race. It is very common that private investment is needed to achieve some milestones of the project. In no case, you will get private investors or big brands, bet on an idea without first, having burned all your ships and having invested economic resources. We also know that your resources are limited, so we'll help you invest them wisely.
It's not enough to have a good idea. Private investors need to confirm that your invention works. Ideally, it is to reach investors with a functional prototype, with the appearance of a final product, which allows investors to visualize the manufactured invention. In case you do not have financing to manufacture a prototype, it is advisable to carry out a feasibility study and basic engineering project. In this service, we can submit your invention to our laboratory, where you will obtain a document that ratifies the viability of the invention with exact mathematical data, defining geometries, shapes, behaviors of the invention in various scenarios and approximate costs to manufacture a functional prototype.
The manufacture of a functional prototype allows you to iterate enough to reach a version of the product that, in addition to working, allows you to demonstrate that the prototype can be manufactured in series. Precisely, these are the conclusions that an investor needs to make his decisions. With a high-quality prototype, you have a 90% better chance of getting investment to launch your invention.
It is key to choose with great success the registration method to legally protect your invention. If your intention is to sell the patent, I anticipate two tips:
1.No you can keep a utility mode as a protection method.
2. You must choose a country of initial registration where it is possible to attract investment funds specialized in patent defense processes, the United States is the best environment.
You must understand that what you will sell, is not only the patent. Investors value and choose to invest or buy a great business opportunity. Therefore, you must obtain a quantitative valuation of the business as a whole. For this, in Let's Prototype we have useful methods to set a sale price of the patent, which includes in the formula all the critical points of the business.
Most Inventors is clear that it wants to sell the patent, but in few cases they define to whom. In Let's Prototype we form a patent sales strategy that starts from the analysis of the profile of investors or potential brands that could be interested in making the purchase. To do this, we analyze the business scenario of the different market players, study their positioning and develop scenarios that simulate the economic effect of the acquisition, in this way, we facilitate the process of approach and analysis.
5 Steps needed to finance your invention.
Change the chip! We do not need to talk about the invention and its star functionalities. Investors are not your customers. You need training to identify the arguments that make your invention, your prototype and your business an attractive opportunity for investors.
We will design the concept of your invention, with details that bring you closer to the criteria necessary for the prototype to work. With this graphic and technical material, we will define the module of the commercial presentation on the arguments that make your invention unique. With this module, we will open the eyes of potential investors.
After a market analysis of which you will be part, we can help you create your first business plan. We will create different scenarios and strategies to make your invention profitable and why not, make your patent profitable. We will make the economic forecasts of each of these strategies so that you can expose the opportunity to investors.
Although raising funding for the development of a prototype is a negotiation process, it is key that you define a firm proposal. We will help you define an assessment of your invention or patent according to the level of maturity of the project and the real chances of succeeding in the market. Once this valuation has been established, we will define, according to the financing you need for your prototype, an attractive proposal for potential investors.
We can help you create the necessary documentation for the investor acquisition process. You will need, at least, a credible business plan, a letter of intent to formalize the intention of the investors who manifest to be able to finance your invention and above all, a shareholders' agreement that regulates the rules of coexistence in the business between all the partners, to be able to commercially exploit the invention.