Finding the Right Funding Route for Your Product
Start-ups, new business owners and creators often approach a product design consultancy inspired and optimistic about realising their idea but restricted in their freedom by funding limitations.
Nonetheless, new product development covers an unimaginably broad array of sectors and with the constant growth of the field of new product development, the funding landscape continues to evolve and expand. Securing funding for design and development is the single biggest challenge faced by many innovators and given the range of funding sources now available, knowing where to focus your search can feel daunting. When different funding avenues all state their criteria is for “innovative ideas”, what does this really mean?
Understanding your funding options is made simpler by the fact that certain funding avenues are better suited to certain types of businesses and products. This means that understanding where exactly your idea falls can help you channel your funding pursuits in the best directions.
Beyond this, before looking for funding, it’s vital to consider the big picture surrounding your product. The product design and development costs needed to achieve a manufacturable design are considerable; even then, the design costs do not represent the full scale of what’s needed for market success. Other investments such as tooling and product marketing must also be accounted for. At ITERATE, it’s important to us that our Clients are able to successfully commercialise their product ideas; creating real products and legitimate businesses cannot be achieved without a full appreciation of the level of investment required.
Start With the Technology
When first asking the question: “could I secure funding?”, it’s useful to look closely at the technology involved in your product. Is that technology new and unproven yet? Or is the technology, known but not previously used within your application?
Government grants and public body funding such as that provided by InnovateUK is available to support technologically high-risk projects; this is understood through Technology Readiness Levels (TRLs). TRL is a term used across R & D to explain how developed a certain technology is and TRLs range from 1-9. Technology Readiness Level 1 refers to when a basic principle has been observed, or an idea formed (often in an academic environment). Whereas, Technology Readiness Level 9 denotes a state where the technology has been proven and is in full operation in a commercial environment.
InnovateUK in particular helps to commercialise research, specifically helping start-ups navigate the so-called “Valley of Death”. The Valley of Death refers to TRLs 4-6; this is the phase of development that bridges the gap between academic fields and industry. Bodies such as InnovateUK exist in order to support technology or product development through these particularly high-risk moments.
If all of this feels overboard for your development, if the technology used within your product is already well-established and known, other routes are still available.
Consider the Power of Your Consumer Appeal
A new product does not always have to incorporate ground-breaking technology to solve a market problem or serve a purpose. When your product uses known technology, the risk of development is lower; this can mean that pursuing government or public body funding is unlikely to reap rewards. However, Crowdfunding can be a great funding route to explore if your product is capable of really compelling its users and inspiring admiration or intrigue.
Crowdfunding can be a strategic move for funding product development because it also tests the market appetite for your product; important insights can be gained if your campaign slowly fizzles or explodes with thousands of backers overnight. A successful Crowdfunding Campaign can also be used to attract further investment later in the development. With this in mind, it’s also important to appreciate that successful Crowdfunding Campaigns don’t just happen, they will require budget and real preparation.
How Scalable is Your Business?
Venture Capitalist (VC) funding is particularly effective for scalable product opportunities. VCs are often highly interested in technology-driven products (for example, IoT devices or products utilising AI); additionally, VCs are likely to be more intrigued by strong market differentiators and novel business models. If your product is targeting an emerging market (such as sustainable energy), VC funding could be a good fit. When thinking about pursuing VC funding, it’s worth remembering that investment stems from interest – even financially-driven decisions are dependent on a solid fit.
If your business has scalability but is not necessarily in a market that might engage a VC or Angel Investor, there are many business development grants available to support R & D projects that have high-growth potential. ITERATE work with Welsh Government to deliver the SMART Innovation Scheme which supports businesses to engage with design and manufacture to stimulate job growth.
There are a number of different avenues for funding a design project; finding the right route to fit your product and business goals will make this process far easier to navigate from the start.
Contact: 01291 408283