so I want to talk about a subject that it's going to come up when it comes to
inventing and that is money where are you going to get the money to fund your
product and notice I didn't say to fund your idea because remember ideas have no
value what we're looking to do is turn our idea into a reality
and that's gonna cost money interestingly enough even after all
these videos I've been making somebody asked me in the comments why they
couldn't just take their 3d model show it to people and get money now maybe he
hasn't been paying attention to the way the real world works here in the real
world nobody's gonna pay you anything for a 3d model or even a prototype and I
think that's where people get a little bit confused remember when you're
talking about your invention you're actually talking about making people
believe in you they're not really investing in your idea or your product
they're investing in your ability to follow through and I think a lot of
people miss this point they get so wrapped up in their idea that they think
people are just gonna hand them money because hey maybe it will change the
world but guess what people still aren't going
to invest because they need to know that if they give you their hard-earned money
that you're gonna follow through and be able to sell the product to return their
investment sometimes inventors don't want to hear it affect that if you're
gonna take money from people you're gonna have to figure out how to pay them
back it doesn't matter if it's a loan or an investment in your company an idea
you still have to have a plan to pay them back or you're never going to get
any investors now this video is going to be talking about a couple of things
there's many different ways to get investors one is to sell finance which
is the way I always recommend it because in the past I have gotten large
investments for some of my business and my product ideas and it doesn't
always go as planned it doesn't even mean that your products
going to fail and things are gonna go wrong that way your product could be a
huge success and you still run the risk of investors getting greedy as they see
you trying to grow your company because you got to think of it this way you're
passionate about taking all the money you're making and growing the company
hiring more employees building an infrastructure whatever it takes to
build up your business but investors might only be interested in the cash
that they gave you and getting a profit for that investment so you're gonna have
to weigh both things are you going to grow the company or are you going to
keep your investors happy and that's why for me I've learned I honestly just sell
finance now it's easy for me to say because I've been doing this long enough
we're investing in products is sort of built in to my business model but when
you're first starting out I know that can be a problem but keep this in mind
and I've talked about this in previous videos I really don't want you to spend
more than you can afford to create your first product it's a
learning experience you should be out there defining markets and finding
simple products that you can build and sell on the Internet
I've done it so can you I've made expensive products and I've made cheap
products it just depends on the market and what I feel like doing at the time
but for you guys starting out I want you to stay below that maybe $5,000
investment maybe 2,500 and I'm not kidding you can do it and you can make a
lot of money with just a few thousand dollar investment now knowing the
demographics of this channel I know that even twenty five hundred may be a lot of
money but the next time you're thinking of buying a Playstation or a new video
game think about putting that money aside and holding off and using it for
your invention idea because really you're going to need 3d prints for your
prototype you're going to need all kinds of other pieces along the way that
you're not going to be able to get for free you're gonna have to pay for them
somehow so back to this issue of why can't I just make it through
Reidy model and show it to people and get money well because you don't have a
business plan and that's why nobody's gonna give you money it's not the 3d
model that's a problem it's the implementation of your idea and the plan
to start selling it that is what's going to attract investors that's when you're
gonna start believing in you they're not gonna believe in you if all you have is
a 3d model so you could talk about it and show how enthusiastic you are you
know with the idea and how great of an idea is and how it's gonna just be in
every household none of that matters because if you don't have a plan to get
it in front of all the people that are potential customers how do you think
you're going to sell it how do you think the investors are going to get their
money back you need a plan so there's a couple of ways like I said self
financing would be the first which is the one I recommend but then there may
be people out there to have a product that's a little more expensive now
unless you have been machining and designing electronics and building molds
and all that stuff which I'm sure there's some people out there they have
those skills already I don't recommend this next level because you have to have
a lot of experience behind you as a product designer there are just so many
different steps so many different materials so many different processes
equipment fulfillment issues it just goes on and on and on that you need to
learn when you get to this next higher level and if you've never even made a
hundred products and shipped them from your house you're not gonna know how all
this stuff works and you're gonna be risking a lot more money but if you're
at that point where maybe your investment is 75 100 150 thousand
dollars to get started because maybe it's an electronic circuit board it
needs injection molds for the cases the boxes it's a retail product so maybe it
has to be packaged like you know Apple products and all the other electronic
stuff today and that can all get very expensive so yes it's very easy to get
up to 150 200 250 thousand in the beginning if this is your first
one I would try to stay less than 75 but it depends on what your tolerance level
is so how are you gonna raise this money if you don't have it yourself you can
sell finance and use a credit card but that can get really expensive you'll
actually have to use a couple credit cards if we're talking over seventy five
thousand dollars you could get a second out on your mortgage the again these are
things that I really don't recommend if you've never done this before because
this is where it gets risky and there's no guarantee that you're going to
succeed I could make about ten videos on all my failures so just keep that in
mind there's another couple of things you can do here one would be called a
family and friends round there's a really good video here on YouTube about
the founder of Alibaba and he needed $50,000 to start and what he did it he
got 13 family and friends to make small investments of a few thousand dollars
each now he was in China which I imagine it means that he got labour cheap
because he then took that $50,000 and ran a business for a year before he was
able to even get his first customer nobody believed in the idea and as we
all know they just had their largest day where they made something like what was
it a billion dollars in eight minutes or something and the day turned out to be
thirty billion dollars just because people don't believe in your idea we all
know that shouldn't stop you because nobody knows better than you what the
path to success is and you can do it but family and friends would be the second
round and that's probably the safest bet if you get small investments from a few
people that way if it's only a few thousand dollars each you you're not
gonna really upset anybody especially if you try and keep them informed along the
way now at this level too you can talk about crowdfunding Kickstarter and
IndieGoGo but a word of warning with this which I don't mention in the other
videos those websites have become sort of saturated and they really don't
attract the interest from news and other places to generate enough
traffic for you so if you're going to do one of those projects on Kickstarter or
other crowdfunding sites you're gonna need your own marketing campaign and
trust me there are so many scammers out there trying to take money from you you
could wind up giving away or throwing away all your money before you even
start your project and then when the project is a success you may not have
anything left because of all your advertising money that was spent so be
careful even with Kickstarter and other crowdfunding sites it can be risky
nowadays gone are the days where you put something up there and it just goes
viral you need a huge following that's one of the reasons I don't do it anymore
honestly I can do my own promotions and it's not worth the hassle
the Kickstarter crowd is not the crowd it used to be either they're not as
willing to work with you and be nice to you if you take longer because they
think it's like Amazon where the product should be there within a week but it is
a good Avenue if you're willing to put into time and work hard at it but it's
not your only option the last and final way to raise money would be called
venture capital now I could tell you that I tried this in the beginning and I
even had working prototypes and was ready to go I met with a few venture
capital companies and few investment banks things like that
they offered me two million dollars for my original track stick for 80% of the
company now keep in mind I had already built and designed the product had the
working software the molds were almost completed and we were ready to go for
sales and they wanted me to give up 80% of my company
now for some of you that may be an option if you have a product that
requires a really large infrastructure and a growth potential of millions and
millions of dollars it may be worth your while but I will
tell you that you're going to need people that are experienced at raising
venture capital and you're going to have to have what
an exit strategy which means you're gonna have to be prepared to have your
company sold and lose control of everything
and that also means that if you don't perform there's a very good chance that
you won't even be running your company in a very short time so when you give up
80% of your company to other people you give up pretty much all control and you
spend your days fighting with boards and other employees such as CFOs and you may
not even be the CEO at that point so you'll be fighting with him or her or
whoever else is in charge of you and your boss another thing I might add
about my opinion of venture capital yes there have been a few product companies
that have been bought out by large corporations publicly trade at Facebook
Apple and all that but that is a game that those companies play they are not
really product companies and while you are able to make millions of dollars if
everything works out ok I'm not sure it's worth the stress if you're just
looking to invent a product you may want to set your sights up much lower in the
beginning because for a small investment you could find yourself making millions
of dollars without all the added headache so this is something to think
about when you're looking for investors you're looking for venture capital
family and friends self-financing these are all the options that are available
to you some of them will get you started right away and some of them could take
you years to pursue so that's another issue if your product is a technology
product that has a short run lifespan venture capital and that long tail
strategy may not be good for you because the product could be obsolete before you
ever make any money I hope you take these options seriously and decide what
the best path is for you if you're not sure what the best path is you may want
to talk to your accountant and see what he suggests the funny thing is here my
accountant regret it for a long time that she wasn't the one
invested in my first big product when I was talking to her about venture capital
so you'd be surprised who was really interested in what you do
you






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