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    10 Replies Latest reply on Jul 12, 2008 3:15 PM by gregangulo

    prototype financing

    rayandnay Newbie
      where would be a good place to go for prototype financing and what should you do once a prototype has been developed?
        • Re: prototype financing
          LUCKIEST Guide
          prototype financing again. Hi Ray. we go round and round and still looking for prototype financing.
          Again, LUCKIEST
          • Re: prototype financing
            Lighthouse24 Ranger
            A prototype of what?
              • Re: prototype financing
                LUCKIEST Guide
                Lighthouse, Great question. He wont tell. We did this last year.
                LUCKIEST
                • Re: prototype financing
                  DomainDiva Ranger
                  It's a secret.
                    • Re: prototype financing
                      rayandnay Newbie
                      nice to see we have grownups answering these questions
                      • Re: prototype financing
                        GrowthCurve Adventurer
                        I'm new here, so I'll play along.

                        How you finance a prototype has a lot to do with what you plan to do with it when it's done. Well, more accurately, is has to do with how risky the business is that will presumably sell the product once it goes into production.

                        If you have a waiting list of buyers for your finished product, then building the prototype is a little less risky. After all, you already know that people are going to buy it when it goes into production, so you might decide to get a bank loan, if you have the assets and credit and everything else required to secure this financing.

                        However, most prototypes are for products where you're still not sure exactly how much it will cost to build the final product or whether anyone will actually buy the thing when it's done, so you're probably looking for pure risk capital, not debt. It would not be wise to borrow money for this sort of venture, even if it were available to you, unless you are really willing to gamble that the business will fail and you'll still have to repay the loan.

                        Before you get to the prototype phase, you need to have a strong plan for what you'll do with the prototype once you have it. Where do you envision having the product manufactured? What might it cost, more or less, to make? And most importantly, who is going to buy it when it's produced, and how will it get sold? Are you going to build a business around the product, or are you going to sell the whole thing to another company and let them grow it?

                        All of these questions need to be addressed in a business plan, and then you can take that business plan to find the right kind of investor for your company. Phase I of your business plan will be securing funding for the prototype, and you'll probably be best suited to looking for a traditional angel investor as opposed to a venture capital shop.

                        It sounds like you're not exactly forthcoming with details of your product. I don't necessarily fault you for that, but you have to know that on forums such as these, you have to give information to get information, otherwise we're dealing with a vacuum, and it's borderline impossible to give relevant, actionable advice.

                        Feel free to contact me offline if you'd like to share more details that you can not share here. Perhaps I can point you in the right direction.
                          • Re: prototype financing
                            rayandnay Newbie
                            thanks, you must be from another country, your intelligence is refreshing
                              • Re: prototype financing
                                gregangulo Newbie
                                Rayandnay,

                                Most people in the business community have long memories.

                                Do you have a business plan? If you submit for anyone to view your plan include a Non disclosure agreement (NDA). I am not sure how knowledgeable you are about the process but there are people here willing to help with direction, writing a business plan and since Luckiest is with Score, he would be able to direct you in many ways. I have used Score resources and they are very helpful, though I believe myself competent in developing plans in the areas I focus, I still attend their workshops.

                                We all must start somewhere and if you are at the beginning of the process and have a good idea than make use of this forum and I suggest this due to the fact many of us were already there some of us have forgotten and some have not. 'Any help is better than no help at all'

                                The process of finding risk capital is lengthy, a competent business plan and person to present the plan especially when you are speaking of a 'prototype' is advisable.

                                Regard,

                                Greg
                              • Re: prototype financing
                                LUCKIEST Guide
                                Growth Curve, Good answer, HOWEVER I did it with him last year.
                                "Feel free to contact me offline if you'd like to share more details
                                that you can not share here.
                                Perhaps I can point you in the right
                                direction." Did it, Done It
                                It is always nice when new members answer and add substance,
                                That is how this web site grows, LUCKIEST
                          • Re: prototype financing
                            DomainDiva Ranger
                            I have never sen anyone ask the same question in so many ways...at least hes......creative?