What is the best way to earn $2,000 for my startup? Family and friends is not an option.
I created energy efficient cookware. The first product is a cooking pot accessory used with the cooking pots one already owns to boil water 30-50% faster, hold a rapid boil better, and simmer with a lower flame. I have a business plan that was a finalist for two competitions at The Whitman School of Management at Syracuse University.
I have a few testimonials from those in the industry and a survey confirming people would buy my products at a profitable price. I am preparing for a beta test phase but I don't have the funds to conduct the beta test. I need about $2,000 dollars. Do you have any advice?
Expert Answers
Sort by Date
Sort by Votes
Apr 22, 2014
Consider launching a Kickstarter campaign. You will find 'backers' for your project who essentially preorder your product. More info here: https://www.kickstarter.com/help/faq/kickstarter%20basics.
Apr 22, 2014
First thought is $2k will take you nowhere, should probably aim much higher. Prefundia first, socialize it with your contacts, build a network of supporters before you launch a capital raising campaign and get feedback from cokking experts as well. Sending people samples is by far one of the best things you can do, so people will really notice the value of the product when they get to try it for themselves and actually use it. Target people who will go on to write product reviews, which will generate excitement and build credibility. Then go to Kickstarter and launch it. Dave Cochran, Cochran Edwards Capital Partners, Seattle
Apr 22, 2014
You used the right word, Josh: "earn." Work, save your money, and then invest it in your own idea. This is NOT something where you should use no external funding. And, since F&F are not an option, do it yourself. You'll be glad--damned glad--that you did.
And with great respect to the advice from our colleagues above and below, I would ignore the advice of EVERY one of them. Here's why: If $2K turns out to be insufficient, YOU want to be the first one to find that out, and you DON'T want to have to explain that shortfall to anyone else. If you do, they will automatically believe that, since you missed a small-number forecast by a (relatively) large amount, then any other forecast you make will be likewise sloppy and not thought through. I'll grant you that's an unfair way for others to think, but they will. Do this yourself, and keep it to yourself until you've gotten far enough along--with your OWN money--to have a good sense of whether you have something viable or not.
If it takes you a while to fund this idea yourself, so be it. But doing it any other way than by yourself will likely result in you losing control of what might be a good idea. And that could cost you millions and millions of dollars. . .if it's a really good idea.
Do it yourself, Josh. That way you own it--lock, stock, and barrel. If it's a great idea, you'll be in a much stronger bargaining position down the road because, before you ask others for money, you will have your own in the deal.
May 10, 2014
Ask yourself this. What would Microsoft, Apple, Starbucks, Dell, and others look like if they had been crowd sourced?
May 13, 2014
@Keith - Have you read 'Pour Your Heart into it: How Starbucks Built a Company One Cup at a Time'; Starbucks certainly was not built on self-funding. As I recall Howard Schultz pounded the streets of Seattle trying to convince HNWI's to invest . . . he could have saved himself a lot of time via and equity crowdfunding platform! Although as I said to Josh in my original post, for $2k, I believe self-funding is his most appropriate funding mechanism.
Apr 23, 2014
I would agree with those who recommend getting $2,000 is only the tip of the iceberg knowing that any electrical or gas operated appliance will require all kind of certification, health & safety regulations approval and solid liability insurance. Before putting any more money into the prototype I would validate if the invention already exists and if it has been patented in the US. If no - get that done first and find an investor/mentor who knows the kitchen appliances industry inside out. Wishing you nothing but success!
Apr 23, 2014
$2,000 is enough for me to produce 20-30 prototypes depending upon the size the beta tester would like to use. This is by no means anywhere close to what I need to fully launch. The goal is to start small to reduce risk. Once I have the 20-30 prototypes, I can expand my beta tests, earn testimonials, prove the viability of my products, and pitch for larger amounts of money. I already conducted a prior-art search and I have a mentor that worked for HP while they were a startup. Thanks for your insight!
May 25, 2014
Martin is right, there are so many government regulations and test that need to be done. If you can handle the hurdles to jump through, then do it. If not I would suggest in an earlier comment to involve a larger food service company to invest and even produce your product.
Apr 22, 2014
I agree on indiegogo or kickstarter IF you have a viable prototype and the capacity to build and ship such prototype in a reasonable time if you earned enough.
I can also help you with setting up your financials to ensure that you are getting the most tax advantageous return on your business.
Apr 23, 2014
Thanks for your insight! I have the capacity to build and ship each product within 5-7 days and hope to improve upon this in the future. I work with a company in Syracuse, NY to manufacture it upon request. I am considering and indiegogo. I will keep you updated and certainly reach out to you regarding financials once the time is right.
Apr 22, 2014
For such a small amount I would self fund; get a job and save up. If the beta test phase is successful and you then require larger amounts to get your product to market, you could try Crowdfunding; the following web site provides a good overview of your options - www.crowdingin.com.
Good Luck
Jason
Apr 23, 2014
Jason,
Thanks for your feedback. I want to beta test more to earn more testimonials. Right now, I only have 2 prototypes and this limits how quickly I can get feedback. For example, right now both prototypes are being used by individuals in the commercial cooking industry. If I had a few more, I could get feedback faster. I am applying for jobs very soon once I finish my last week of my undergraduate career.
Apr 22, 2014
Gofundme.com or idiegogo.com (please check the spelling). Hopefully, you have a patent (or at least a provisional patent filed in your name).
Funding resources are available and I can connect you with them provided you qualify. I just ran into one last week who lives abroad in South America.
Kindly let me know of a website where I can look up your product if visuals are available.
Apr 22, 2014
Start a Kickstarter account if you are looking for free money, or contact your bank to see if they will loan you money.
Apr 22, 2014
After exhausting my own limited funds, I entered a business plan competition and won $5000 for my start up.
Apr 22, 2014
Can you get a customer to finance your product ?
http://www.cookware.org/membership.php
Apr 22, 2014
for such small amounts, I do invest myself on my projects. If I need a large amount for a project, I will try to find a partner with reasonable terms.
May 2, 2014
The folks who have given you testimonials are one source of funds. The Whitman School of Management is another (ask the folks who judged). You might try speaking at a local business group about your idea. If there is a local Biznik chapter, meet some of their members. The final would be a local utility that sells electricity or gas. Any way for them to reduce demand is probably something they might be interested in.
Apr 22, 2014
Business incubators pool resources, mentorship, and access to capital sources (angels, VCs) between multiple businesses. You will have to find one in your area but in DFW here is a list as an example to go off:
http://dallasventurepartners.com/community
Apr 26, 2014
You really need to put in that 2K yourself ... maybe you have the money?
Or ... with your Whitman School of Management wins, testimonials and the need for conducting the beta test you may have success with an SBA loan ... how is your credit?
Michelle beat me to it. Kickstarter is a great way to raise the money. Once you get it I would suggest you approach a few companies like Volrath, Kitchenaid, Calphelon, They may pick your product up. I am in the food service industry and a product like your would be appreciated. Currently I use induction cooking because of it's efficiency. Best of Success! Gil