There isn’t a week that goes by that I don’t have several Inventors contact me either asking if I would like to invest in their idea or can I direct them to someone that would invest. The thing that troubles me is the lack of understanding of what they are asking and what it will require. I have listed some questions and information below that you need to consider before asking for an investment. Think about any other questions you would ask or information you would want if you were the investor?
1. Not knowing how much they realistically need in the form of an investment to get their product from idea to the store.
2. Not knowing the value of their product so they can break the investment down into percentages. The Investor will need to know what percentage of the product/company they will own for their investment. Example: Does a $50,000 investment get them 10% of the company?
3. Not having a business plan detailing how they plan on spending the money once they have the investment.
4. What ROI (return on investment) the investor can expect and how soon after the investment can they expect to see a return?
5. Will you need more than one round of investment money?
6. Do you have a distribution network for your product?
7. Do you already have other Investors?
8. Do you have a working model?
9. What protection do you have for the idea, if any?
10. Who are your competitors?