Part 2: I Have a New Product Idea – Where Can I Get Funding?
Money, money, money. While some may think of it as the ‘root of all evil’, it is a necessary one when it comes to birthing an electronics design.
In a recent podcast with Electronic Product News, Robert Webber, Field Applications Engineer at Harwin, discussed how to get a new product out of the ‘ideas stage’ and then addressed the question of where to source funding.
While the image of a sharp-suited venture capitalist might immediately spring to mind, that tends to be a few steps down the road – beyond the ‘proof of concept’ (POC) prototype stage Robert spoke about in the podcast. Your initial port of call is likely to be nearer to home (savings, family, friends, the local bank manager) – or, if you work in the industry, maybe it will be the management of the company that employs you.
Whoever you are sharing your idea with, first things first, ask them to sign a non-disclosure agreement (NDA). A well-constructed NDA, normally drawn up with the assistance of a lawyer (though off-the-shelf templates are available for a more modest price and can be re-used multiple times), will protect your idea – or at least, limit the risk of the other party being able to use it or share it without significant financial repercussions.
Robert offered some general advice: “When you’re pitching your idea to the manager or a person that you’re trying to get buy-in from, you need also to think, what is their ‘problem’, what are they trying to solve in their type of business?’ It is an important point, because this way of thinking may direct you to explore other routes of finance. As Robert points out, a Dragons’ Den type investor will be focused on getting a return within a certain timeframe, but a company that operates in a related field to your invention may be interested in taking their business in your direction, for a fee.
Another source of funding might be governmental. If you are a British entrepreneur with a solution to a problem that is in the public interest to solve, or would produce economies when delivering public services, it is worth consulting www.gov.uk/apply-funding-innovation. Of course, such grants and loans exist elsewhere in the world – one global not-for-profit organisation is Techstars Foundation, and there are various others. Getting in touch with a local university may be a fast route to this kind of information, experience of funding scenarios and even potential funding partners.
The question of how much money you’ll need depends very much on the complexity of the project and how far you have managed to get in the POC stage. As Robert mentions, an important consideration is certification: “Generally, this is quite an expensive thing to do, because it requires an external test house.” Certification is just one example of why enough funding to employ other engineers with the right skillsets and experience is essential before you get to the third stage, design and manufacture – the subject of the next blog in this series.
Read part 3 – How to scale from small to large scale production on our blog now or listen to the full podcast.