March 22, 2017    7 minute read

Realistic Strategies For Getting R&D Funding From Investors

Pitching in the Modern Market    March 22, 2017    7 minute read

Realistic Strategies For Getting R&D Funding From Investors

Seeking investment for R&D funding can be a tricky thing. On the one hand, there is a need to develop a project tangible enough that it actually has some background behind it. On the other, the actual would-be investors are not in it for the joy of discovery most of the time, rather seeking valid profit instead.

It’s important to keep in mind that early research and development funding is difficult no matter how brilliant the idea is. The implication of R&D funding is that the company has a new and unproven technology on their hands and need revenue in order to make it a reality. Even further than that, “research” implies that they are also not entirely sure that the idea will work at all.

It’s not uncommon that investors are afraid of new and untested technologies even though they may change the world as we know it – they are in for the profit, first and foremost. So how can someone go about developing a working and successful strategy for seeking investor funding for the R&D project, and minimise the investors’ ability to say no?

Research and Combine Ideas

While it is good to have a solid footing in the project that a company wants to sell and earn an investment, it’s also a good idea to play around beforehand. Just last year, popular social media platform Snapchat raised $1.8bn in funding thanks to its easy-to-share content and approachable interface. It’s one of the best examples of how a small idea can become huge in the market.

By exploring every nook and cranny of a project, the company can make certain that their idea and execution are exactly what they want to pitch to the investors. There has to be no doubt about the project or the technology, and exploring every venue available will do exactly that.

Snapchat’s funding over the years due to popularity and innovation; Source: crunchbase.com

In order to be satisfied with a project, a company needs to make sure that they have explored every avenue of research that they deem interesting. That way, they will not only satisfy their team’s curiosity but also make sure that take every factor was taken into consideration. By doing so it is possible to find out that certain elements or ideas go better with others, or realise that the initial pitch wasn’t as bulletproof as they thought. Rushing this part of the process is never a smart idea – it is risk-free and rewards curiosity.

Create a Prototype

Most investors who fund research and development want to see working prototypes before investing their hard-earned cash. This means that the company has the task of developing a working prototype that will give the investment board an idea of what they are getting. Creating a prototype will give the company a mean to see their idea and technology at work beyond the theory. This will allow the sales pitch to be more convincing, knowing that the technology works and can be applied to the mass market.

Investors are looking for a turn-around on their capital, so devices, technologies, and items that cannot be monetised probably won’t create the ‘wow’ the developers are looking for. The prototype has to show the clear and undeniable application in the mass market.

Another thing to note is the functionality of the prototype – making triply sure that what is being presented is working properly. While some clients will see this and understand it’s a part of the process, others will argue that it lowers their trust in the researchers’ abilities or turns them away completely.

Present Benefits and Applications

As mentioned before, seeking investor funding will go that much easier if there are clear outlines about the what, who, where and how of the device or technology. Telling three of them three separate stories will lower the funding options significantly because the investors are almost always networked together.

Today’s market is all about indulging the consumer’s needs – they are the number one priority of everything R&D these days. That means that technologies that have mass-market appeal will attract and raise funding opportunities, or even pull some investors towards the developers without them doing a thing about it.

Clearly outlining the benefits and applications of the technology, but also any potential bad sides to it is essential. Looking for help by using some of the best websites as a MasterGrades is a good way to develop a sales pitch. They need to be presented in a way that ensures the investors that the company is still looking into ways to overcome these bad sides, but it’s important, to be honest, and forthcoming about future plans.

Today’s world is all about the return on investment (ROI), and all the investors know this. The company needs to believe in the R&D and whatever idea they are presenting – if they are unsure and divided over what benefits and applications their technology can achieve, no investor will ever consider trusting them with research capital.

Crowdfunding

While it may seem absurd to use crowdfunding as a source of investment funding, it’s not as strange as it seems. More and more projects are getting off the ground because the public investment is what fuels the budget needs. Platforms such as Fundly and Fundageek allow teams and companies to set a sale pitch, a prototype, and a demonstration, followed by a milestone deadline and a vision for their creation. One such example is Irish Medical, a company that develops technologies that help children and adults with eye problems. They have successfully raised money for their R&D via crowdfunding, exceeding the asking amount and gaining 197% of capital they needed in the first place.

If official investment funding is something outside the realm of possibilities, it’s not impossible to fulfil the research funding goals by using dedicated crowdfunding platforms. Crowdfunding is a very open and social way to get R&D funding, and it allows community feedback and development of new ideas. Sometimes this is exactly what a technology needs in order to develop in the right direction.

Set Future Plans and Expansions

No one said investments were a one-time deal. Investors are keen to invest their funding into multi-layered projects that have future potential beyond the initial sales pitch. Investigating any possible upgrades, technologies or developments that would be applicable to what the company is selling right now is essential to successful funding.

The sales pitch should include any exciting future plans that the developers have thought of when it comes to their new R&D project. These can range from expanding into new territories, putting the product or device into every home in the US.

One of the best examples of this is Uber, the driver platform that allows people to quickly and efficiently order a vehicle to pick them up, and even become drivers themselves if they meet certain criteria. Based on this approachable idea, the expansion possibilities are limitless, and Uber has recently acquired a huge sum in funding due to rising popularity and accessibility.

These are the visions and enthusiasm that sparks the interest of investors. Good technology and knowledge will only get research so far because sales skills are what seal the deal in the end. If the investors are happy with the plans and see the potential of this new project, the funding request will be just a simple formality.

R&D Funding in a Nutshell

Even an inapplicable project that is years away from the market can be successful at getting the funding it needs if the creators believe in it. Every idea has the potential to develop into something that can change the world (social media and medical research being the prime example). It’s just a matter of timing and using the correct channels of research funding.

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