People with a knack for design are rarely the same people who have the skill set of an elite financier. Sure, there are notable exceptions, real and fictional (think Steve Jobs, Elon Musk, or Tony Stark). But the fame of these figures is a testament to how rare it is for “design genius” and “finance tycoon” to collide in a single individual.

Two Essential Pillars for Successful Product Development

Successful product development rests on two equally important pillars: applied design and innovation, and investment capital. On its own, the first pillar is never enough to guarantee a product’s success. On the other hand, no matter how ground-breaking (and market-viable) the second pillar might be, it too lacks the strength to stand on its own.

For entrepreneurial startups and smaller companies, bringing both pillars together to fund their new product development can be a daunting challenge.

At Pivot International, we’re a one-source product design, development, and manufacturing firm that has seen clients deploy an array of successful strategies for successfully securing funding. With nearly a half-century of experience across fourteen industries, we’ve learned that our clients’ ability to raise capital often depends largely on knowing the funding strategies that are right for their needs.

In this piece, we’ll explore three funding strategies and which will give you the most bang for your buck as determined by whether you’re seeking to raise capital in five-, six-, or seven-figure ranges:

Five-Figure Funding Strategy — Bootstrapping

Funding at this level is often a matter of good old-fashioned “bootstrapping,” or tapping into existing resources, including those of friends and family. In practice, bootstrapping is nothing more than self-funding. By this definition, it can include micro-loans, government- or non-profit grants, or community organizations. Bootstrapping works best for ultra-low complexity (non-technical) products and is most often undertaken with credit cards, small business loans, home equity loans, or a line of credit.

Suppose you’re looking for capital in the $5,000 range. In that case, you want to be sure to identify one of the many micro-loan organizations designed for supporting startups or specific demographics (such as women or minorities). If you visit the Small Business Administration‘s website and use the Loans and Grants search tool, you’ll be able to determine whether you qualify for a grant or a guaranteed loan to help you launch your product.

Six-Figure Funding Strategy — Crowdsourcing

Funding in the six-figure range can take several forms. But increasingly, crowdsourcing is proving to be among the most accessible and effective. (And it should be noted that in some cases, crowdsourcing can be a top strategy in the five-figure range as well.) There are now many crowdsourcing platforms to choose from, including Kickstarter, IndieGoGo, and GoFundMe. These platforms have been used to fund many profitable products, including those in the technology sector.

Crowdsourcing is a “strength in numbers” approach built on what can be thought of as a “micro-investment” model. Rather than seeking investment capital from a single individual with deep pockets, crowdsourcing relies on hundreds or even thousands of small donations. For this level of funding, crowdsourcing has the added advantage of letting you bypass the need to commit future equity shares to your investors.

Seven-Figure Funding Strategy — Professional Investors

Medical, industrial, and highly complex consumer products almost always require seven-figure funding. This means you’ll need to go a more traditional route and work with professional investors (angels and venture capitalists). This level of capitalization is a high-stakes game for all parties. For this reason, the bar for proving your product’s market viability will be exceptionally high and will depend on establishing proof of concept.)

Like all elite finance professionals, professional investors make money with money, which means there’s no way around owing your investor a significant portion of your future equity and profits. When pitching to professional investors, many design-savvy and innovative individuals make the mistake of giving a “product presentation,” educating the investor about their product’s features and benefits. Investors are not meeting with you to learn about your product, per se, and it’s essential to come prepared with a very different approach to your pitch presentation.

To identify U.S.-based angel investors, check out Angel Capital Association, which counts more than 330 angel investor groups among their membership. AngelList is another excellent website for connecting entrepreneurs with qualified investors.

Once you secure your funding, you’ll be ready to jump in with both feet to the broader product development process! If you’d like to learn more about how we can help you establish proof of concept and help you take your product from prototype to successful launch, contact us today for a free consultation.