Q: I am a sophomore at Suffolk University in Boston and I have an idea that I think could save lives. The business model I developed for my product would donate one unit to a person in need for every unit that is sold -- that will save twice as many lives, I hope. How do I find the funding to develop a working prototype? - John McGovern
A: John, you’re going into business for all the right reasons. So many people think of entrepreneurship as a way to get rich quick, but that rarely turns out well. If your enterprise doesn’t make a difference in people’s lives, then you shouldn’t be in business at all.
Building a prototype isn’t always an essential step, but yours might help you to land investors by showing them how the product will work. It really can change attitudes. Try to keep costs as low as possible. Your prototype should demonstrate your product’s most important functions, look good and capture investor’s attention It must be easy to understand.
Finding a source of funding for a startup used to be a bigger obstacle than it is now. In the past, entrepreneurs used to have to carry their business plans from one company to the next. This process could take years, and often ended in disappointment. But times have certainly changed. There are now throngs of investors, companies and organisations looking to invest, hoping that the next big thing will come their way. Crowdsourcing and government loans are two other options for aspiring entrepreneurs.
But you’re not ready to launch yet, and funding for a prototype can be a bit more limited. Many people pay to build their own prototypes since that can greatly improve the chances of their receiving crowdfunding or investment.
Potential investors like to know that you’re committed to your idea, and spending your own money on that idea will go a long way to convince them.
If self-funding is not an option, try reaching out to family and friends. There are few people better suited to doing business with you than those who know you best.
You already trust their judgment, and they more than likely already believe in you and your plan.
You’re also involved in a community of smart and creative people who might be able to help you to realise your dream. Have you thought about approaching your classmates? If not, it’s time that you did.
You can also look into accelerator programmes. An accelerator is a group of people that provides a small amount of money in exchange for a stake in your company. They usually offer hands-on guidance and mentorship, and they can introduce you to investors and prepare you for a longer funding journey.
If you don’t want to give up any equity in your business, then a loan is the way to go.
You’ve clearly got the right spirit, and it sounds like you’re onto something great with your idea, so now it’s time to start reaching out. Don’t wait to get started - there’s no time like the present. Good luck!
Mr Branson is the founder of the Virgin Group. Email: [email protected]