When a new product or business is launched, a working prototype is recommended by most investment experts before funding from potential investors. A prototype is an early sample, model, or release of a product built to test a concept or process or to act as a thing to be replicated or learned from. They will be able to connect with your idea emotionally, and understand where you are in the product development progress with the help of a prototype.

 

Frequently, it may be impossible to build a prototype before trying to attract investment capital, especially when funding is necessary to develop the prototype. Luckily, you can raise funding without a prototype – if you can show investors how worthy your project is.

 

Clarify the Risks

 

When estimating deals, risk in your venture will be figured out first. Funding without a prototype, however, risk components are broken down into three areas:

- Amount needed.

They want to know how much you’re funding, and whether it really needs that amount. Asking for excess capital is a red flag towards investors.

- Your team.

In the beginning, investors will sometimes skip the the lack of a prototype if your team has extra technical skills and proven product talents.

- Time frame for a prototype.

You also let them know how long it will take to for a viable prototype. Moreover, you need to prove them you can accomplish it with the first round of seed money.

 

Analyzing these components helps investors estimate the risk of your business venture funding, and enhances the chances of raising seed capital without a prototype.

In short, just build a persuasive case for your business idea. Compose a “must have” checklist for your product or service, and show a clear vision of SWOTs. With a convincing case, investors put more their trust and become more open to funding decision.

 

Alternative Financing

If you can’t get investors without a prototype, try alternative sources of financing. If you are creative and can make conspicuous videos, you can raise funding with crowdfunding for a source of investment capital. Other sources such as family and friends, small business grants, credit cards and bank loans, peer to peer lending, and community development credit unions.

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