Roger, Thanks for all your comments and help. I will push to get a my plan written up, as I agree that is an important piece I am missing. We have thought about the the 3-D model, but downshifted away from it thinking investors or distributors would want to touch and feel the product if they were going to participate. The product works with, or enhances bungee cord uses. I like to call it the paperclip of bungees — but then aren’t all inventors in love with their ideas. I have researched distributors because bungees cords are already being placed on retail shelves. I am hoping to convince the distributors my product enhances what they are already doing. One of the distributors is Coghlan’s of out Canada. they seem sympathetic to inventors because they have a detailed application process on their website to submit ideas to them. I have nearly completed their requirements hoping to gain market interest and hopefully license them in the niche they are already distributing to. Am I up in the night or moving in a logical direction?

Have you considered a 3D printer model? If you want serious interest by investors you will need a business plan written. You can still get the interest without sales of the product. Our business plan was based on potential sales of the sofware. It was still in the very early beta stage when we showed it to investors. We had a breakwdown of what the finished product would do and based on our presntation we received our funding.

http://www.rogerbrown.net

I’ve filed my patent (last November). My proforma is nearly done and present-able. I have not written up a plan, but could and have a great business plan “a”. Where I’m really stuck is if when dealing with an investor showing them the actual market interest. I know my market numbers, but I don’t know the interest or how to show that interest exists outside of the ohs and ahs I get when I have demonstrated my project to a very small sample. I think most of my problems stems from not having the real product in hand. My mold costs are $20K to make the real thing, but what investor wants to drop $20K if I can’t show them market interest, but I’m having a hard time showing interest without having the real product in mine and others’ hands. I found a a company in MN that I think can crank out a 100 pcs. of the real product without making the $20K actual mold, but I haven’t heard back from them yet (It’s only been a few days). Does that help to let you know where I’m at in the process. It probably works more to show how lost I am….

Mike, if an Investor approached you do you have a business plan ready to show them? You also need to look at the rules for your state about accepting investments because these rules can have a big impact on how you proceed.

http://www.rogerbrown.net

Roger, you provide some great insight, but the bottom line is I need cash to move this project forward. However, I’m caught between having little funding to make widgets myself and showing a potential investor the genuine market interest. I can’t show the market interest because I can’t make the product, but I can’t make the product because I don’t have funding funding. I’m sure I am not the first schlub to face this problem, and thus I’m looking for ideas and thoughts of how others have bridged the hurdle I’m facing.

Mike, funding is a double edge sword. It may get you where you want to be, but you have to be aware of the price you have to pay. If you borrow money from family and friends and your venture does not work out, you still owe the money and it is hard to see a relative daily you owe money. It makes family gatherings awkward too.
Another aspect is the investor that is not a family member. They don’t invest just to invest. They expect results and a profit on their investment. You need to have a good business plan that is realistic, not one that is inflated with milestones you can’t possibly achieve. As the saying goes “Don’t let your mouth make promises your butt can’t cover.”
Investors also want a piece of the company. You need to know how much your company is worth in percentages so that you are selling shares correctly. If you say your company is worth $100,000 in its present form and you need $50,000 in investment are you willing to sell 50% of the company or more? You can quickly go from majority stack holder to minority stakeholder.
I was CEO of a children’s software email filtering company. We had eight employees and we had to raise over $300,000 in investments to expand. We raised the money from three investors. It was very educational learning all the ins and outs of negoiating the deals so they did not take the company from us. Plus, you had to have stipulations as to the extent of their day to day involvement in company business otherwise you would have been having to call them on every decision you wanted to make since it was based on using their invested money. You also had to agree on the length of term for a return on their investment and the buying back of shares to retain full control of the company.
I always tell Inventors to use investors as a last resort.

http://www.rogerbrown.net

Jack,

Thanks for pointing out some great rocks to look under! I’ll be surfing until 3 a.m.

Mike

Mike

This might help:

http://bizfinance.about.com/od/angelinvestor1/t...

Good luck!

Jack

Thanks for your response. And great advise. Any idea where to poke around to find these investor groups?

I had the opportunity to pitch to a few investors already and I can tell you from my experience that whenever you sit down with someone and talk about your ideas error on the side of caution and ask them to sign an agreement using the term consideration(a legal term meaning the exchange of things of value) before beginning. The investors that I spoke to were very willing to sign, and it made the conversation go much smoother for both of us.