When you have a product idea, there are a lot of steps in the process. Eventually, the goal might be the creation of a prototype created with CNC milling service or some other kind of manufacturing process. That prototype can then be extremely useful to get funding from investors.
Skipping over the prototype phase can make it more challenging to get essential funding, so the following are tips and things to know about utilizing your prototype to raise money.
A Prototype Can Create an Emotional Connection
You want potential investors to feel a connection to your product. Investors are often driven by emotion just as much as other factors when they’re making a decision.
It’s pretty tough to create that sense of an emotional connection without a prototype, and typically people aren’t creative enough to use their imaginations.
You need to give potential investors they can see and even hold. This sensory experience can make them significantly more excited about your product than they would be otherwise.
Being able to see and hold something is going to help investors feel confident in their decision if they’re on the fence as well.
When you have a prototype, you’re showing that what you have isn’t just an idea. You have something real and usable.
Another benefit of having a prototype is the fact it shows dedication and a sense of clearly defined vision.
Investors Will Expect You To Have a Prototype
If you think that a prototype is just a “nice to have” rather than a “must-have” when raising funding, you’re wrong.
Not only do investors expect prototypes, but they expect them to be fairly high quality. This doesn’t mean perfect, but it does mean they’re a good representation.
Investors know that it’s cheaper, easier, and faster than ever before to develop a prototype, so they see no reason why everyone shouldn’t have one if they want to secure funding.
If you’re not willing to make the effort to build a prototype, what’s going to convince possible investors that you’re worth their money?
You Don’t have to Spend a Lot
When you’re looking for funding the last thing you want to be doing is spending a lot of money, but you don’t have to.
A prototype doesn’t have to be expensive for it to function as it should to secure funding.
It’s highly likely you’re overestimating how much it would cost to develop a prototype, as is the case with most entrepreneurs.
When you’re in the midst of the product development process, and you’re simultaneously trying to raise money, you have unique opportunities for feedback along the way.
When you have a physical prototype, you can take feedback from potential investors and use it to refine what your actual product becomes. It’s also easier to respond to feedback from possible investors and make these changes quickly when you have a physical product to work with rather than some abstract concept.
As investors are providing feedback, possibly without even realizing it, they’re also strengthening their own emotional relationship to your product.
It’s a good thing to indicate to possible investors that you’re willing to listen to feedback and to integrate it into your process. This shows them that you are less likely to hit major project pitfalls along the way because you’re flexible and can foresee possible issues as a problem solver.
Make Product Differentiators the Focus of Your Prototype
Investors don’t want to see what you’re doing the same as everyone else.
The focus of your prototype should be on those key things that differentiate you.
Let your prototype be the way you put your differentiating features front and center so that you can show how it’s more valuable than what’s currently on the market.
Use Your Prototype to Show How You Plan to Become Profitable
Above all else, possible investors are interested in putting their money into something that’s going to bring returns.
Showing investors that your product is equipped to do that is an enormous challenge.
Use your prototype to walk investors through the steps of how you plan to get to profitability.
Keep everything streamlined and consistent and avoid going off on a tangent just to show some unique feature that doesn’t have a place in your pathway to profitability.
Finally, always be honest about your limitations with your prototype. Let investors know what your prototype is lacking in an honest and transparent way, and where you plan to add to it. You want to manage expectations when you’re showing a possible investor a prototype but also highlight your priorities and areas of focus.