Updated: Feb 1, 2021
So, you have a brand-new idea, it's innovative, groundbreaking, and unlike anything else out there. You are passionate and excited to create it, put it into production, and start making money but WAIT you need to fund and create your prototype first!
You can self-fund, use family/friends funding, and even get funding from investors, but most investors will not invest in a product without a working proof-of-concept prototype, in other words make sure your idea works! By having a prototype for your new electronic product, it will show investors you're committed to your idea. Additionally, adequate research with a viable business plan will show further commitment. Doing a quick Google Patent search will also ensure that your new electronic product is unique in the market and save you a lot of time and energy before embarking in the journey.
There are several funding opportunities available for developing your new electronic product, obtaining funds from numerous sources, and not relying on just one is key. Here is a list of the top 5 ways to fund your new electronic product to get you started!
This method requires a bit more time and research because there are countless grants available. This is essentially funding that does not need to be paid back but you will be investing a lot of time in finding the grants and going through a lengthy application process. These can be extremely competitive with rigorous application requirements, deadlines, and timelines of when the funds are distributed, so proceed accordingly. These grants are available from state and federal agencies, private corporations, and foundations, even non-profits. They are usually category specific, such as for startups, new product inventions, research & development stage, and so forth so find a grant that aligns with your goals. With all the grants available, searching for the right grants can be quite an undertaking, luckily there are paid grant subscription services to help you in your quest.
Government and Federal Agency
Benefits.gov is the official benefits website of the U.S. government, here you will find information on applying for small business loans and grants being offered by various government agencies. An example of this are the grants given by The Small Business Innovation Research (SBIR) which supports small businesses with technological innovations with federal research funds. There is also the Small Business Technology Transfer (STTR) program. This program offers funding opportunities in the federal innovation research and development field.
These grants are offered by the government, private corporations, and universities and colleges that support new ideas that are unique and can help the economy prosper. Additionally, some nonprofit organizations and foundations provide grants if the idea aligns with their agenda. Certain organizations offer grants to fund inventions from female entrepreneurs’ others like VentureWell have a goal of supporting early-stage innovators within US-based colleges and universities. Researching and reaching out to these organizations to offer your pitch can help in obtaining funding for your new idea. Sites like Grants.gov can assist in locating some of these types of grants.
Innovation Scholarships and Competition Awards
Being awarded a scholarship or competition award is also a great way of sourcing funds to get your idea going. These programs recognize and reward college and university students for their innovation and assist in developing an invention. These scholarships and awards can be found online, an example of this is the Collegiate Inventors Competition Award from the National Inventors Hall of Fame Organization whose mission is to advance innovation and entrepreneurship.
Paid Grant Subscription Services
As previously stated, there are a ton of grants available so it is great to get a little help in the search since that might be half the battle. For this there are paid grant subscription services, which is a grant database listing various grants in one place with a fee for using the grant searching engine. One example of this service is GrantWatch, they can help in obtaining grants for nonprofits, businesses, or individuals. They claim on their website that most of their grants are from foundations and corporation sources, which are usually difficult to locate. They have a specific section for grants available to help start or grow a business that are specific to entrepreneurs and startups.
There is also USAGrantApplications an online grant application system that provides an easy process for discovering grants. Although, a paid membership is required for accessing the grant database their service comes with a guarantee that states “if you apply for funding using one of the applications you find on our website and you don’t receive funding, your membership fees will be refunded to you immediately.”
2. Angel Investor
An angel investor is a qualified investor that uses their own funds to invest in small businesses. These types of investors usually invest in startups that are in their beginning stages but like anything else they will invest in areas that fit their agenda, so researching them is necessary. You will need to convince the investors that your idea is worth investing in and that you have done your research, so having a business plan with financial projections is a must. It will be important to provide timelines for when the prototype will be developed, how much will be needed to fund it, and show that you have experts in place to help in creating your new electronic product. A few to explore include SeedInvest and Angel List and Angel Investment Network which focuses on the technology sector.
3. Crowdfunding Platform
Crowdfunding also helps in obtaining funds in the early stages of an idea but not all crowdfunding sites are created equally so it’s important to research which ones are a good fit for the product you are creating. The two most common ones are Kickstarter and Indiegogo. They are both great options but, if you are seeking funds for the early stages of prototype creation, Indiegogo may be a better fit because Kickstarter requires a prototype. Indiegogo focuses on tech products and getting innovative ideas produced.
4. Small Business Administration Loan
The U.S. Small Business Administration offers entrepreneurs many resources that include how to fund your business and obtain business loans with vetted lenders. The SBA works hand in hand with partnered lenders to provide capital to small businesses, they are basically guaranteeing your loan to make it easier to obtain money for your business. Among other resources available, the SBA website also provides resources in putting together your business plan, which will be required to obtain funding for your business.
5. Bank Financing
It is not the preferred method but, if you need funding quickly to get the ball rolling on your idea to create your prototype, this route is an option. This will allow a new business to get funding quickly since the qualification is based on the individuals own credit and ability to pay it back. You can easily explore the various types of financing available at your current financial institution, these usually come in the form of business loans and lines, and business credit cards. This may create a financial burden if the idea does not take off so utilize this as a last resort and ensure that you have a plan to pay it back quickly. Again, tread lightly with this option.
Looking for funding is not easy, but the opportunities are out there with extensive research. Ensure that you create a business plan and budget of how much will be needed to fund your idea and create a working prototype. With your prototype you will be able to pitch it to your audience successfully and bring it to market.