Do you have a phenomenal tech idea that’s bound to change the way the world works, plays or shops? Maybe you’ve developed a new microchip that can be made locally, sustainably and works faster than anything else on the market. Or perhaps you’ve invented a technological wonder that could revolutionize the healthcare industry.
Whatever your idea or invention might be, you deserve a hearty congratulations for all your hard work. But after those kudos pass, your next step is to buckle up and prepare for the next phase of launching your tech into the marketplace. That next step is landing funding for your invention or tech startup.
In truth, manifesting an idea into a prototype typically takes a lot of time, research, hard work and testing. But that’s just half the battle. The tricky bit is getting funding or getting investors to back your tech so that you can begin making money on your brilliant tech idea. If you can relate, here are some fundraising ideas to help you get your tech startup or invention off the ground.
The DIY Option
While you might be dreaming of getting on TV and jumping in the Shark Tank to fund your tech project, the truth is that only 4-5% of startups win backing from investors like Mr. Wonderful on the show. In truth, most inventors and startups bootstrap their tech ideas by good, old-fashioned hard work, savings and savvy budgeting.
It’s true that buying equipment to advance your tech to the marketplace can be mind-bogglingly expensive. As such, think about purchasing second-hand, or renting. Many startups opt to lease or get lab equipment financing to further develop their tech ideas, which can be far friendlier on budgets than purchasing outright.
Of course, some initial expenses will happen when trying to roll out your tech to the consumer market. According to a survey conducted by the Kauffman Foundation, that’s when almost 40% of inventors and tech entrepreneurs seek loans from banks or dig into personal savings to get the fire started on their tech ventures.
While self-funding might seem daunting in the face of mega-expenses for getting your tech launched, in many instances startups don’t need an investor to convert tech prototypes into actual products for sale.
Venture Capitalists and Angel Investors
Yes, we just mentioned that getting support from venture capitalists (VCs) and angel investors is a slim bet. However, that doesn’t altogether crush the possibility that your tech invention might catch their interest.
If you decide to go the investors route to fund your idea, be aware of the difference between the two. A VC typically works with a group of other wealthy investors. If the group approves your invention or project, they pool their resources together and then invest in a venture using the capital and finances from the VC entity.
Alternatively, an angel investor is an independently wealthy individual who needs no approval. He or she uses their own wealth to fund projects rather than tap the resources from a board of investors.
In either case, you will need to pitch your idea or prototype in an effort to persuade investors to fund your tech. Just bear in mind that investors aren’t always backing your tech out of the kindness of their hearts. These deals often come with agreements to pay back the money granted to your project, or perhaps royalties are pinned to every unit sold of your invention.
You should also remember that even if your tech idea is declined by an investor, that doesn’t mean your product doesn’t have legs on which to stand. There are many instances when investors reject a startup and that tech entrepreneur goes on to make billions without getting an investor deal.
It’s no secret that every tech startup needs a helping hand. This is often when inventors or entrepreneurs begin to seek outside help – not from investors, but from loyal followers in the tech community. This is known as crowdfunding. A few examples of crowdfunding platforms are Indiegogo, GoFundMe, Kickstarter and its alternatives.
These platforms allow you to share, update and exchange information to passionate followers about your tech and inspire them to contribute to your cause. They also make it easy to incentivize donors by offering freebies or deep discounts once your prototype gets into production.
While crowdfunding is a great way to boost awareness and drum up funding for your tech startup, it poses a lot of hard work. Additionally, you’re responsible for every dollar donated to your tech. Therefore, you have a heavy obligation to succeed.
Considering this, many inventors choose to raise funds through friends and family. This option for fundraising your tech startup can be either extremely advantageous, or it could lead to disaster. That’s why it’s crucial to get very clear about the viability of your tech invention. It’s also incredibly vital to plan and build in safeguards so that you don’t let your friends or family down as you are launching your tech into the marketplace.
In conclusion, your tech proposes big challenges ahead, but rolling your idea out into the consumer market doesn’t have to be entirely an uphill battle. If you have a good idea, there will be people who believe in you and your idea. So, stay vigilant, be transparent, and keep pursuing every avenue to launch your tech startup.