How to Attract Investors

“I have an idea that’s going to make millions of dollars!” Have you ever said this out loud?  Thought it? Wrote it down? If yes, then “congratulations on your idea!” is what you can expect on the best of days. Most successful companies begin with just an idea, but what makes them lucrative is what comes after that moment. An idea by itself is not enough to get the attention of investors, governmental agencies, and financial institutions. After you have your “AH-HA moment,” you need to get to work on cost analysis, prototyping, and market research.  

Before the light bulb goes out, write down your idea.  It doesn’t matter where or how you write it; just write it! Make a drawing of the product and describe how it works. You don’t need to be an engineer to draw something. Do it at stick-figure level artistry.  Next, try to create a model of it: start with cardboard, papier-mâché, construction paper, clay, or a 3D model in software. Once you have something that you can hold or see on a screen, figure out what material it will be made out of. Now you have most of what you need to approach a machine shop, seamstress, woodworking shop, fabrication shop, etc., to get a quote on making your product.  Make sure you get the cost for making one AND a larger batch.  You are now armed with the knowledge of your product’s cost.

If you can make the product yourself, great. If not, you should have the contacts to have your prototype made in the previous step. Having a physical asset for investors or lenders to see and touch is important.

You will need to provide financial data to investors or lenders to assess the feasibility of your product’s success. Here are just a couple of ways to get some real data:  

• Find a comparable product and search for sales data on it (units sold per year is great).
• Contact consumers or people in the industry your product would be used in and get their input on how well your product would sell.
  

If you price out your product, get a prototype, and do some market research, you’re equipped to start preliminary talks with investors or loan officers. As you take the steps above, make sure you document everything.  Every criticism, sale, purchase, conversation, and drawing must be retained. Once you’ve done all the above, you can start contacting companies to partner with.  If you hit a wall and aren’t able to secure funding for a large production run, consider having a smaller batch manufactured and start selling directly.  When you revisit the investors, you can come armed with real sales data, which will make them more inclined to invest.

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