Here is how to prepare before pitching an invention idea to an investor.
Did you invent something? Do you have a killer idea for a new product, and are looking to present your idea to an investor?
To successfully present your idea to an investor, you have to prepare yourself and work exhaustively on your idea, preferably in an organized way.
Investors are interested in certain aspects of a proposal and you have to make sure you address those issues well. You should know about your potential users, target market, competitors, suppliers and have visions about the product’s short term and long term future.
You should also be able to clearly define what type of partnership you are looking for in order to commercialize your product. Before you present, think about the following:
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Decide Your Path to Market
How do you see your product/invention being introduced to the market? Inventors often opt for licensing, which can be pretty complicated and technology transfer as it allows quick monetization and enables them to concentrate on new projects. You could also consider other options depending on the potential of the business and how you want to remain involved with it.
Create a kick-ass prototype. Create a working model. Know more about your market and users. Do your research, gather answers to questions people might ask about your idea, and improve your idea. Get users, note their feedback, make changes as necessary, repeat.
Work Towards Your Presentation
During the presentation phase, you have to actively focus on a few criteria that are popularly asked for by investors. Make sure you have a very strong value proposition, and a strong presentation deck to boost your confidence.
Path to Market: Project, Product and Company? Licensing or Selling the Invention
If you get a company who is interested in your product, you have a decision to make. Do you want to sell your invention or do you want to sell your invention’s rights to an individual or company for them to sell your invention? Licensing can be a tricky topic some might not fully understand. This could be because there isn’t a direct process or path to take.
Emily Moorhead, Senior Marketing Specialist at InventHelp tells us getting an invention licensed is a very difficult thing to do and there are no cut-and-dry instructions to get a product licensed, but there are a number of resources and tips to follow. When trying to get your product licensed, you need to dedicate the time it takes to find potential buyers, and research everything which goes into getting a product licensed. Important information such as intellectual property, how to identify the right licensor and how to consult professionals for help can be good resources for your invention process.
Contract Manufacturing and Selling Products
Sometimes it is hard for inventors to create their own products. You might need parts or equipment, which are not obtainable to the average person. Contract manufacturing is a for-hire firm that will produce a specific quantity of your product for a set based-fee. Nicole Lininger, Director of INPEX, America’s Largest Invention Trade Show, suggests this option might make sense for some startups and single entrepreneurs for them to get an inventory of their product.
It also allows them to entrust the entire creation process to one entity without extra funds on manufacturing equipment. Today, we have the technological ability to go online and find resources on how to reach out to contract manufacturers for your specific industry. There is no set-in-stone way on how to present your product to companies or which direction you should go when it comes to the invention process. For your process to run smoothly, get to know these terms and act on the ones which fit your invention and its industry.
Creating a Stand-Alone Company
Your invention could be strong enough to justify setting up a sustainable stand-alone company. Setting up a company will generally require a lot of effort but if the product offer is strong enough it should not be impossible to get proper funding and framework to get investors interested in your company. As an inventor, if you believe in yourself and think that you have the expertise and experience needed to run/start a company, this could be the right approach.
Related Article: Calling All Angels: How to Attract Investors for Your Startup
Feasibility Assessment: Conceive, Build, Test Market Research
You need to research not only your idea to see if it already exists, but the industry, retailers, target market and competitors. Market research takes place to find out who, where and why people will purchase your invention. It will help you determine the market size of your product, your competition and how to figure out the opportunities your product will have in its industry.
There are a lot of aspects which go into researching your market. A starting point could be conducting consumer surveys to find out demographics and psychographics of your target audience. You could also find information on your competitors to see what you are up against and what makes your product different. Finding the answers to this research will help you determine whom to market, where to place your product and why people could want to purchase it at the selling price.
The creation and testing of a prototype can be crucial in your invention process. A prototype can help you with marketing and licensing as well as knowing if your idea really works. A model of your invention lets you practice all of the functions, designs and fundamentals. Take one step at a time with creating your prototype.
Sketch a drawing on what you envision your product to look like, then create mockups of your product. It may take a few tries before you get your prototype to do what you want it to do. Lininger says there is no right or wrong way to create a prototype. Prototypes can be made from objects around the house, manufactured by a third party, created by a 3D printing machine or designed with CAD software.
What you need for a good presentation. Strong value proposition.
Your value proposition should articulate what problem your product addresses, how does it solve it, and why would people be buying your product instead of buying someone else’s. According to Arthur A. Boni, Ph.D., a good value proposition must clearly address the following questions:
- Who are your customers?
- What need does your invention address?
- What’s your invention’s name?
- What’s the product category?
- Why will they buy your product?
- What is the current primary alternative to your product?
- What’s the primary differentiation?
Check this Kickstarter pitch from Pebble, a smartwatch that connects with your smartphone and displays emails, notifications, plays your music, run other apps and of course, tell time. The project raised an astonishing $10.20 million from more than 70,000 backers, helping Pebble evolve into a stand-alone company.
The Kickstarter pitch is a fine example of how a value proposition should look like. Kickstarter, Indiegogo, and Gofundme are a few platforms you can use to see other inventors and entrepreneurs formulate their value proposition, and get real-time feedback as you can also see how funders respond to each pitch.
A Good Presentation Deck
Having a good presentation deck to compliment your pitch is a good idea. The presentation helps your audience connect better with your pitch as they see a lot of visual cues that point to the things you are saying. There are a lot of good presentation templates available on the Internet just download the one you like best and edit as you need. Here is a really good article detailing the components of a good pitch deck.
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Optional: Business Plan
The business plan should pretty much sum up your strategies and plans to make the business succeed. The business plan shows that you are serious about the idea, and have knowledge about the key performance criteria that impact a business. The business plan should include industry analysis, evaluation of market and competition, products and service offerings, marketing and sales strategies, etc. among other general plan components. Present financial projections if possible, and explain financial requirements clearly.
Although a business plan takes time to build and often is not the most exciting thing to do for an inventor, it has become quite important in today’s competitive business climate. To create the business plan, you will need to gather, evaluate and analyze all relative and relevant information available out there in a structured way. This will be a good exercise for you as an inventor/entrepreneur too as you will be looking into the different aspects of the proposed business.