Damon Bonser, co-founder of the British Design Fund, gives in-detail advice for design entrepreneurs for how to fund a project, no matter what stage it’s at.
The idea for the British Design Fund came to me while I was mentoring on both the Design Council Spark programme for product and design start-ups, and the Accelerator Academy, a tech incubator for software start-ups. I was shocked at the huge disparity between the huge number of early stage tech funds available compared with the lack of early stage investors for the product teams at the Design Council. The lack of any seed investment institutions operating in the same way as the tech funds do – combining sector expertise with equity investment into early stage businesses – pointed to an evident and aching need.
Deciding how best to finance your product start-up business is gradually getting more and more complicated. As alternative forms of funding are becoming more readily available, start-ups have many more options available to them than they did ten years ago. The myriad of product innovation grants, benevolent funds, awards and crowdfunding platforms available for the early-stage product companies can leave some founders feeling a little overwhelmed when it comes to choosing how best to spend their time, and limited budgets, when raising that all important seed money to help launch their product idea.
If you’re at the back-of-beermat stage, but have some fantastic ideas, and have the skills to turn those ideas into actual products, then you may be best suited to applying for an innovation award of some kind. Typically these are incubators which walk you through those critical very early stages of your first product’s development challenges and start to get you thinking commercially about who you will be selling your product to and how you will be making it. There are some fantastic awards out there which embrace new designers at this stage, such as the Design Council’s SPARK programme.
Those with a product prototype and (hopefully) a business plan have more options, including going to the crowd, to “business angels”, or specialist funding institutions. Each has its own merits: crowdfunding is a great way to raise awareness of your business and product, and you can look to raise money from pre-orders through platforms such as Kickstarter, or if you are a little way off delivering that first product, maybe selling some shares to the crowd could work through platforms such as Indiegogo.
Meanwhile, “business angels” can offer real people to champion and guide your business, as well as fund it. It’ll take some leg work to find the right “angel” for you, but when you do the benefits of having an advisor with vested interests can be an incredibly powerful combination. There are “angel” networks you can apply to, for a small fee, who can showcase you to their members. Just make sure your audience is right for you, and that they are actively investing currently.
And finally, there are specialist early stage product funding institutions such as the British Design Fund. This option gives you the funding you need in exchange for shares in your business, but most importantly it also gives you the sector expertise to deliver your product and rapidly grow your business. Funding partners such as the British Design Fund will need to feel comfortable that your product has sufficient scalability and that your idea can be protected in some way, which is not the case for every product business.
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Source: itsnicethat