Creating a new product is expensive.
Most companies will need to raise funding through other revenue streams or investment. Finding investors can be difficult and you’ll need to convince them that you are worth investing in. Many investors will want to see your product and development plan, your business plan, and their return on investment. This can be challenging if you’re still in the early stages of product development as all of your assets and planning are coming together.
Product development funding can be divided into two categories: Early Stage Funding and Late Stage Funding.
- Early stage funding is typically used to establish the business, start the design of the product, and create assets to help acquire additional funding.
- Late Stage Funding is typically used to complete the product development, scale production efforts, and grow the business.
Types of Funding
Early Stage Funding
- Self Funding (investors will want to see you have skin in the game)
- Boot Strap Funding (friends and family)
- Non-Dilutive Grant Funding (application based)
Late Stage Funding
- Pledge Crowd Funding (Kickstarter)
- Investment Crowd Funding (Start Engine)
- Angel Investment (Individual or Small Group)
- Venture Capital Investment (Firm)
- Bank Loans
- Pre-Order Revenue