I want to start a hardware startup where I have a solution for home water monitoring. The problem is: some investors are already requiring a prototype and most of them are requiring an existing customer base, and a validated market. But how can I validate my product and make a prototype if I can't even get started? I tried raising cash from the family, but no one has an amount available for me. My other options were selling my car (it is worth only US$ 2k) or saving myself. But I would need to save for at least 2 years and I don't want to wait all that long or I'll lose momentum. Notice that I am from Brazil, some points to consider: 1) Some states are going thru water shortage crisis. So my solution would come in good time. 2) There are just a few angels here (around 100) and they aren't that open for projects without a customer base. 3) Banks require credit proof that are 150% of the amount that I want to lend. So if I want 50k they require a guarantee of 150k.
HI...
In your case, banks may be a difficult option. May be in the future you start thinking of banks to redesign the company equity / debt leverage ratios. But not now...
To raise the fund you have some few options..
Venture capitals / private equity is your main target of course. Those who want a customer base will be avoided.
Having it really dififcult to convince these people is something normal, but also, consider you may be doing something wrong, or incomplete. Regarding the feasibility study or the business model. You need to review that..
Why can't you have a proof of concept ? or a prototype ? How much do you need ? How much would it cost ?
what about the tech labs in the university ? The schools of engineering may have some fund. Actually lots do to fund research and small projects. You may also find some other students that can help you build it for a share ..
Go to one of the factories, but make sure you speak directly to one of the board members , CEO , head of engineering or research.. Lots of companies support intrepreneurship. They can then hire you and fund your project as a subsidiary of their company.. That's another option.
Some famous funding alternatives can be intel capital (http://www.intelcapital.com ) , or Bill and Melinda Gates Foundation ( http://www.gatesfoundation.org ) . You may be able to have a grant from this foundation if you have a cause, like the water issue you mentioned. (still your idea is not clear to me )
If you go to angel investors, or some platform like angel.co , you can post a job asking for a partner to raise money for the project.
I will also not mind sending proposals to big banks outside your country. If the project is profitable they will fund it.
and ...
It is always tough in the beginning. Never loose the spirit.
Good Luck!
Answered 9 years ago
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