FINANCIAL BACKING FOR A NEW INVENTION, PRODUCT LAUNCH, COMPANY

Financial backing for a new invention * product launch * company * business idea * financial backing for a new invention * creating demand * awareness

If you are an inventor with an exciting new invention, you may well have gone to your bank to seek financial backing. If they showed any interest at all, they will have asked you to put your house or other assets up as security. Not the best start to your new business life and certainly not a stable footing for any new business.

You may have agreed a loan that will soon be swallowed up by the marketing costs alone because, as a new entrepreneur, you will have had little idea of how much it really costs to launch any new product. Furthermore, because of your inexperience, the marketing may not have paid dividends which will leave you in the position where you owe the bank, you have no cash flow and your house is on the line.

The alternatives are to seek business partners or backers in the form of business angels or venture capitalists. Information about these types of investors are provided further on in this section of our website.

As previously mentioned, you need to have certain elements of you business idea in place before ant business angel of venture capitalist will consider financial backing for a new invention and both parties will want a sound business plan and financial projections laying out exactly what you need the backing for. Any gaps, airy-fairy projections or obvious lack of knowledge or expertise and you will receive a crushing rebuff.

Business angels and venture capitalists invest in people not just new inventions, products and new companies. They have to be confident that you will run the company in a sound financial manner, they will want to know how their money will be spent, they will set targets, expect them to be met and want a substantial equity stake in the new company.

Furthermore, the new company will have to own all the patents, patterns and manufacturing rights and licences for your invention as this is what they are investing in. Nor will they invest all the promised money upfront, this will be released as the sales targets are met. Failure to meet these targets and you could find yourself out of the picture having handed control of everything to business people with far more experience and business acumen than you. This is normal procedure; they are protecting their money and will expect a return on their investment. Consequently, you could find the company and all rights to your invention sold from under your feet.

Welcome to the world of big business! This is why the best business decision you could make right now is talk to us.

Any serious business angel and all venture capitalists will want to put people on the board of directors to protect their interests. This does not mean they will be providing hands on people willing to get their hands dirty. The day to day running of the company will be down to you and any staff. These directors will turn up for regular board meetings expecting to be presented with reports and sale figures and offer advice if needed. They will expect results and if they are not forthcoming, you will be facing down a boardroom table of dissatisfied or angry directors on your own.

Unless the business has tangible assets, it is likely that your equity stake in the business will be based on turnover and profit targets both being hit. Failure to reach those targets and you could find yourself walking away with nothing more than a cursory handshake. This is why the best business decision you could make right now is talk to us.

The majority of one man businesses fail because the sole proprietor has too many hats to wear, too many tasks to handle and not enough hours in the day. Having investors that provide funding for a business and nothing else means that you are still a one man business doing everything except that you have had an injection of money that is released at regular intervals when and only if you hit your targets.

You will no doubt have seen television programmes where successful entrepreneurs invest meagre amounts into new business for a substantial stake in a new business. Sometimes, the inventor or new entrepreneur is asking for as little as £25 - £50,000 to launch their new product. This is naivety on the part of the inventor and what amounts to daylight robbery on the part of the investor who will almost certainly have built clauses into the contract they will have drawn up to ensure they end up with the product at the end of the day.

£50,000 won't even build a decent website and cover the development and internet marketing costs for the first year. The internet is one of the most important mediums for the success of any business, which leaves the budding entrepreneur working night and day trying to make up the pitfalls.

The only way to start any successful business is to start a big one which is we take a different hands on approach to backing any new business idea.