For entrepreneurs and small business owners with a great idea, finding enough money to finance a prototype can be a frustrating barrier. For instance, the cost of making injection mold can run from $10,000 to $100,000, according to invention author Tamara Monosoff. For many companies in the startup phase, this can be cost-prohibitive, as finding financing is a prerequisite in order to move forward. Finding financing can in turn be a challenging hurdle, with less than 1 percent of applicants having luck attracting money from venture capitalists or angel investors, shows data compiled by Fundable. One alternative for cash-strapped companies can be crowdfunding. Here are some steps for getting your prototype funded through crowdfunding without busting your budget.
Reducing Your Prototype Costs
You’ll find it easier to attract investors if you first find ways to lower your prototyping costs, reducing financial risk for your financiers. Often, the most efficient way to do this is through rapid prototyping using 3-D printing. 3-D printing produces molds and products from digital designs rather than starting with a physical mold, making it easier, faster and cheaper to adjust designs and build prototypes. For instance, Tony Kutrieb of gas turbine developer Kutrieb Research says it would normally take his company over $20,000 and five weeks to build a prototype using traditional methods, but with 3-D printing, a prototype can be printed overnight for well under $2,000. You can reduce the costs of 3-D printing by seeking out a 3-D-printer rapid prototyping service rather than buying your own printer.
Whether you use 3-D printing or other methods, you may be able to further minimize your costs by taking some strategic steps. If your prototype contains modular parts, you may be able to lower costs by working with multiple vendors for different parts. For instance, o-ring manufacturer Apple Rubber offers samples and quotes for custom-designed seals made through 3-D printing and other methods. You may also be able to reduce the cost of your prototyping by using materials less expensive than your final product will require until you get to later stages of testing. For instance, hand-moldable plastics, clays and sugru can serve as inexpensive materials for some prototypes.
Lowering your costs will make crowdfunding easier by reducing the amount you need to raise and reducing financial risks to your investors. You can further enhance the appeal of your crowdfunding campaign by focusing on a motivation that matches your target audience. TheCrowdCafe founder Jonathan Sandlund says that there are four main reasons investors finance crowdfunding campaigns: to help family and friends, to support a shared passion, to help develop a product or service seen as desirable from a consumer standpoint or for financial gain. Some investors may be motivated by more than one factor.
Consider the type of audience you’re soliciting when developing the sales copy for your crowdfunding campaign. If you’re seeking to attract investors motivated by business considerations, focus on financial returns. For other types of investors, you might appeal to their empathy, their passion for what your product represents or the sense of achievement that comes from assisting a technological breakthrough. You might even consider offering a finished product or other incentives to investors who contribute beyond a certain threshold.
Preparing to Succeed on a Budget or Fail Cheaply
If your prototype works, you should be prepared to go into production. It’s also wise to minimize early production costs, since you may still need to do some test marketing before you’re ready to produce at scale profitably. Doing a limited production run will give you an opportunity to test out your product’s marketability and usability without investing the same amount you would from going right into full-scale production.
If you find your product needs some redesign, this will make it more affordable for you to go back into the development stage, since you won’t have spent your whole budget on production. Check out multiple suppliers to find the most cost-efficient sources available for your initial production run, and test your product out on small focus groups before scaling up your production and marketing.