Perhaps the most common hurdle that aspiring entrepreneurs and inventors have to overcome is funding. 

After you’ve come up with a stellar idea that solves a real-world problem, you’ve got to find a way to pay for the product development and design process—as well as everything that comes after. And it’s not easy. We’ve seen firsthand how hard it is to get your product idea off the ground.

But, with a bit of research and hard work, you can get funding for your product. And in today’s day and age, you have more options than ever before. 

In today’s article, we’re going to cover everything you need to know about funding, the 9 different types of funding, and how you can leverage it to bring your product idea to life. 

Before You Look for Funding…

Oftentimes, first-time entrepreneurs jump the gun. What you might think is the next best product idea to be featured on a show like Shark Tank—might not be. 

And so, before you spend too much time on your product idea, you need to make sure it’s worth pursuing. If you rush ahead you could make the same mistake the infamous Fyre Festival made back in 2017. 

For those of you who don’t know, the Fyre Festival, which was planned and executed by Billy MacFarland, bombed catastrophically just a few years ago. And with its downfall went $3 million dollars of investment opportunities. MacFarland also went on to serve time in prison for committing fraud, receiving several lawsuits after the fact.

While that’s certainly the worst—and most unlikely—scenario, there are steps you should take to give your idea the best outcome possible.

Before you invest too much time and effort in your product idea, you need to make sure it’s viable. Because you’re not just creating a product—you’re starting a small business. And when you have a business-focused mindset, you’ll make smarter decisions in the short and long term. 

Here are the 4 steps you should do first:

1. Research the market 

Before you get too far, you need to see if there is a need for your product. This is one of the key steps in Product Validation. By finding a need or a gap in the market that your product can fill, you’re ensuring your idea is not just viable—but also profitable.

And if you’re going to convince someone to provide you with funding, you need to prove to them that you’ll be able to make that money back. Otherwise, they have no reason to invest in your idea at all.

Now, we’re not saying you need to prove you can sell your product to everyone on the planet. Instead, you need to prove there is a niche market out there that will purchase your product. If you’re trying to sell the next best razor and compete with massive companies like Gillette—you’re not going to get very far. 

However, if you’re going to sell a subscription service to busy workers as Dollar Shave Club did, then you have a much smaller and highly-targeted niche. That makes it easier to stand out and own a small segment of the market.

Brian Chesky, one of the founders of Airbnb, phrased it best, saying to “build something 100 people love, not something 1 million people kind of like.” 

2. Create a business plan 

According to research from the Journal of Small Business Management, 71% of fast-growing companies have a business plan for their company. 

When you clearly outline the next steps for your business, you’re going to be more prepared than other entrepreneurs out there. You’ll have a more defined structure, be able to clearly define your goals and account for future obstacles. Plus, it allows you to track your progress as you scale your business.

And most importantly—you can more easily secure external finances or loans.

When you can outline your financial projections and show clear marketing strategies, not only will you feel more organized and prepared, others will too. 

3. Gather feedback about your product

After you’ve done some preliminary research and drafted a solid business plan, you can start actually designing the product. This is the product design and development phase. And let’s be real, it’s the most fun part. 

Here you get to put the pieces together—literally—to create a prototype. After several versions, you should end up with a Minimum Viable Product (MVP). This is still part of the early stage of the final product, but it’s useful in helping you get feedback.

At this point, you want to send the product to some early beta testers and critique. Most likely, this will consist of yourself and close family or friends. However, it’s also a good idea to find potential customers in your target market to test it out as well. Their feedback is the key to once again confirming your product is something consumers will want and use.

4. Hire some professional help 

Finally, the last step you need to take is to get help from experts who have done it before. Whether you’re hiring a business consultant or a product design firm, it’s a good idea to reach out for professional advice. 

Not only will they help you make sure you are following all necessary regulations, like patent application requirements or getting product certification, they will also help you with things like packaging design and prototyping. 

After you’ve followed these 4 steps, you’re ready to go out there and get funding for your product idea. 

How To Get Funding for a New Product Idea

It’s the most common question we get from our clients—and we understand why. One of the number one reasons small businesses fail is due to a lack of funding or working capital, according to Investopedia.

And when it comes to finding someone who will invest in your product idea, that’s harder than you might expect—especially if it’s your first time launching a product. 

Why Getting Funding is Difficult for Startups:

When it comes to investing, there are a lot more people out there pitching ideas to VC firms than there are investors willing to take on the risk of a startup. And that’s not likely to change anytime soon. 

In fact, according to a survey from Gallup, 77% of founders cited personal savings as their main source of funding for their startup. And an article from Entrepreneur reported that only 0.05% of startups actually manage to raise any venture capital. After reading those statistics, it’s easy to be disheartened. 

On a positive note, there are a lot more ways to get your small business off the ground than there were in the past. And, if you play your cards right—your product could take off.

What Are the Different Types of Funding?

There’s no one “right way” to fund a business, but some methods are easier than others. So, you need to evaluate all the options available and find one that is best for you. While you can rely on one type on rare occasions, most businesses acquire funding from a variety of different sources. The type of funding you go for will also depend on what stage you are in your business because some are only relevant for startups. 

Thankfully, when it comes to acquiring funding or working capital, you have a lot more options today than you might have had 10 years ago. 

Here are 9 different ways to fund your product idea:

Funding MethodHow It Works
Personal InvestmentAlso called “bootstrapping,” this is money out of your own pocket you invest.
Patient CapitalPatient capital or “love money” is loaned to you by a friend or family member.
CrowdfundingThis involves using online platforms that help you raise small sums of money from a large number of people interested in your future finished product.
Pitching CompetitionsThese are competitions that give you a chance at funding your product idea as well as feedback on your pitch.
Bank LoansThis is money from a business loan provided by a bank. A bank won’t require shares in your business, but you’ll have to follow a repayment plan.
Startup Accelerators & IncubatorsThese organizations offer a full range of resources to new startups, including office space, mentorship, and connections to potential investors.
Angel InvestorsAn “angel” is a single wealthy individual, often a retired executive, who invests in exchange for a share in your business.
Venture CapitalVenture capital firms are companies that actively look for startups to invest in, and they will often invest greater amounts than angel investors.
Government GrantsThis refers to types of government funding, which will vary depending on your region.

Let’s explore each of these a little bit further.

  1. Personal Investment

Funding it yourself is a choice that many first-time business owners make when starting their foray into entrepreneurship. The advantage is that you’ll be the sole owner of your enterprise, wielding full control.

However, an obvious downside is that this is all your money we’re talking about. Dipping into your personal savings does come with its own risks. That may have been money for your kid’s college education or for the mortgage on your house. So, if you go this route make sure you’re still leaving yourself with some savings and not going into major debt.

Take Yvon Chouinard, the founder of Patagonia, as a shining example. In the 1970s, he simply started selling a variety of pitons (small metal spikes used by mountain climbers). Eventually, he would go on to sell clothing as well—and Patagonia was born and funded solely by its annual profits. 

  1. Patient Capital

Colloquially, you may have heard of this referred to as “love money.” Patient capital is loaned to you by a friend, parent, spouse, or other family members, and it is quite common for first-time business owners. 

However, keep in mind that this will often provide only a small source of needed funding. Additionally, getting a loan from relatives changes your dynamic and you now have a business relationship that needs to be navigated with care. Often, the person providing funds is given a share in the company or repaid later. 

When done correctly, patient capital can be a great help in getting your business off the ground. Jeff Bezos famously started Amazon with $300,000 from his parents—and we both know how well that worked out.

  1. Bank Loans

While the first two funding methods are very common, not everyone has thousands of dollars in their savings accounts or relatives willing to invest in your idea. Because of this, a large number of entrepreneurs turn to banks for assistance.

Bank loans are the most common type of business loan—and you can approach different banks to see which one meets your needs. A major obstacle with securing a bank loan is that banks may want to see historical evidence that you can run a lucrative business. Excellent credit is also expected. 

On the positive side, you only have to worry about making the repayments, and you are still in full control of how you run your own business.

  1. Crowdfunding

While some of the more traditional funding options involve loans, there are more recent options like crowdfunding. When the first crowdfunding platform, ArtistShare, launched in 2001, it set off a huge trend for funding projects digitally.

Crowdfunding involves raising funds by collecting a small amount of money from a large number of individuals, usually through an online platform. Today, there are plenty of options like Kickstarter, GoFundMe, and IndieGoGo.

Some of the key benefits of crowdfunding are that you aren’t required to give any of the finances back or give up any control in your business. However, when you use a crowdfunding platform, the individuals contributing are doing so under the pretense that they will receive a finished version of your product. If you don’t follow through, then you could face lawsuits and a huge media backlash—like the “Coolest Cooler” failure back in 2014. 

As you can imagine, crowdfunding is hard. Instead of trying to convince a handful of people to support you—you need to convince thousands. Thankfully, there are full-service marketing agencies available out there that can help. 

One option we often recommend to our clients is Launchboom; they’re one of the leading crowdfunding companies out there, specializing in getting funding even on the first day of your campaign.

  1. Pitching Competitions

A more uncommon way to fund your product idea is by entering a pitching competition. This can be anything from a TV show, like SharkTank, to a local competition in your city. Sometimes, companies even host their own pitching competitions like Cards Against Humanity did with their web show, Tabletop Deathmatch.

Typically, the investors will ask for a stake in the company, but in some competitions, the winners get the prize money and they don’t have to repay it. However, there are usually entry fees to compete in these to pay for the cost of the event.

Similar to VC funding, you need an epic product idea to impress the judges. If you think you have a good chance, then it’s a no-brainer. But even if you don’t, entering the competition can still provide you with other benefits. When you submit your idea, you will get valuable feedback on your product which is useful even if you lose.

  1. Incubators & Accelerators 

A startup incubator helps startups by providing early funding and they don’t typically seek any equity. Their goal is to help you get to what’s called the MVP stage so that you can then apply to a startup accelerator program. 

After you’ve got a product in hand, you can apply to a business accelerator. These organizations will provide office space, management training, and a range of other services to startups. However, unlike incubators, accelerators do usually ask for equity in exchange for their help and funding. 

In both cases, incubators and accelerators support a business through its early stages and provide a lot of mentorship and support. Another benefit is that they can connect you with other funding sources, such as VC firms, angel investors, and banks. 

The downside is that you can’t rely on them in the long term. They’re designed to help businesses in the startup phase specifically. And while they provide you with ample opportunities, they do often still require a share in the company. Because they have so many resources, they tend to be quite competitive and difficult to get into as well.

  1. Angel Investors

Angel investment describes when a wealthy or high-net-worth individual decides to fund your business. Typically they will do so under a few conditions—namely a share in your company and a seat on the board of directors. You may also hear them referred to as a private investor, seed investor or angel funder.

While you will no longer be 100% in charge of everything, an upside here is that your angel investor can bring relevant business experience that goes a long way in aiding your success. And as a first-time entrepreneur—that business guidance gives you a huge leg up.

That being said, in most cases angel investors are usually connected to the startup in some way, like through friends or family. However, you can also find them through angel-specific organizations and websites. Generally, they keep a low profile and will need to be sought out.

  1. Venture Capital

In addition to individual investors, some corporations also exist just to invest in startups. These venture capital firms want to fund businesses that have high growth potential, and they usually go for those in sectors such as biotech and IT. 

If you can present them with a killer business plan and convince them it will pay off, then you have a better chance of getting VC funding. Plus, a venture capitalist can also provide additional expertise and resources.

The downside is that you will have to give up some control of your business. Since they’re fully invested in making sure your company grows and turns a profit, the VC firm will have strong opinions on what’s best. Facebook is one famous example of a company that benefited from VC funding, and it was partially due to the fact the company had a valuation of $100 million (USD) in 2005. 

  1. Government Grants 

Finally, the last way to fund your business idea is with grants offered by your government. A grant is a contribution that is not expected to be repaid, but you will have to follow certain terms as to how the money is to be utilized. For example, a business that is developing technology that helps deaf people could be allocated money for research and equipment.

In the United States, the government only awards grants to nonprofits and educational institutions. That being said, they do still give out loans to businesses. Many other countries also provide business grants, so make sure to research what’s available in your country.

Key Takeaways

At the end of the day, it’s important to remember you’re not just creating a product—you’re starting a business. And with that comes a lot of challenges. From creating a viable prototype to securing funding, there are a lot of steps involved when creating a product that succeeds.

Whether you’re a first-time entrepreneur or an inventor with years of experience, it’s still overwhelming to do it by yourself. Luckily, there are ways to make it easier and find the support you need. One way to make the process easier is to work with a product design firm that’s done it before—and can help you get through the hardest parts.

We’ve helped our clients bring their product ideas to life, and we can help you do the same. Reach out today and we’ll help you with everything from product validation to prototyping. 

About the Author: 

Ventrify is a product design and manufacturing firm that helps entrepreneurs bring product ideas from concept to market. We take in fledgling ideas and bring them through our iterative design process to create products our clients can be proud of. Then, we work with manufacturing facilities worldwide to bring our clients the highest quality products at competitive prices.

If you have questions about using prototypes in your product development journey or need help, reach out to us through our Website, Facebook, or LinkedIn.

Article by Victoria Fraser

When you think of product design, shipping might be the last thing on your mind. However, it’s still a crucial part of the process and can affect your profits if done poorly. One aspect of shipping and logistics is incoterms. 

Incoterms might seem confusing, but they’re actually not all that complicated. If you’re shipping a product from one location to another, then it’s crucial you understand what they are and how they work.

When it comes to freight shipping, the history is fascinating. From horses pulling carts to container ships transporting literally—tonnes—of goods, we’ve come a long way. Now, the interconnectedness of our supply chains allows us to buy all kinds of products and goods, like pineapples from Hawaii and saffron from Spain.

Logistics management is an entire field of study in itself, and many people dedicate themselves to understanding all the different stages of transportation. While we don’t expect you to be a supply chain manager, you can still benefit from understanding the overview of Incoterms when designing your products.

Fun fact: The first shipping container was only invented in 1956 by American entrepreneur Malcom McLean.

A key part of international shipping is the incoterms, which can be intimidating to a lot of people. Thankfully, we’re diving deep into the topic in today’s guide on incoterms. 

What are Incoterms? 

In the world of shipping and logistics, Incoterms is an abbreviation of the words: “International Commercial Terms.” These are the terms agreed to by the buyer and seller, which reduces confusion in the shipping process. 

They are written as three-letter abbreviated trade terms and were formally established by the International Chamber of Commerce (ICC). As a result, the logistics of international trade are simplified since they clearly communicate different aspects of cross-border trade.

In general, there are a few things major areas that incoterms address: 

  • Point of delivery: This defines the point of change of hands from seller to buyer.
  • Transportation costs: This defines who pays for whichever transportation is required.
  • Export and import formalities: This defines which party arranges for import and export formalities.
  • Insurance cost: This defines who takes charge of the insurance cost.

What are the different types of Incoterms? 

There are 11 main terms to know when it comes to Incoterms, but we’ll break them down for you. Use these to help the buyers and sellers communicate the provisions of a contract clearly. 

Here is a quick table with the different terms and what they entail:

CodeAcronymWhat’s Involved
EXWEx WorksThe seller ensures the goods are at the seller’s premises or another specific location where the buyer loads and clears the goods for export.
FCAFree CarrierThe seller delivers goods either to the carrier, a specific person at the seller’s premises, or another specific location. Any risks passed onto the buyer must be clearly stated.
FASFree Alongside ShipThe seller delivers goods alongside a vessel chosen by the buyer. The responsibility lies with buyers after goods are alongside the vessel.
FOBFree Onboard VesselWhen the seller delivers goods on-board a vessel chosen by buyers. The responsibility lies with the buyer once goods are on the vessel.
CFRCost & FreightLike FOB, except that the seller must pay for the costs and freight to deliver goods to their destination.
CIFCost, Insurance, & FreightSimilar to CFR, except the seller arranges insurance cover against the buyer’s risk of loss or damage.
CPTCarriage Paid ToThe seller must arrange the transportation of the goods to a specific destination, but doesn’t insure them.
CIPCarriage & Insurance Paid ToLike CPT, but the seller is also in charge of insuring the goods.
DAPDelivered At PlaceThe seller delivers the goods to a specific destination, after the goods have been unloaded. The seller has full control of up until the named place of destination.
DPUDelivered At Place UnloadedThe seller delivers the goods ready for unloading at the specific destination. The seller has full control up to the named place of destination.
DDPDelivered Duty PaidThe seller is in charge of all costs and risks relating to the delivery of goods to the buyer’s named place of destination, including clearing goods for export and import, paying duties and any customs formalities.

This list is also organized from the most obligation to the seller (ECW) to the least obligation to the seller (DDP). When choosing, you’ll need to carefully weigh the pros and cons of each one. 

How do I choose the right Incoterms?

With so many choices, it’s difficult to know what to choose. While there are a lot of factors to help you decide, here are some general tips to help you.

One common practice in the industry is that you should “buy” FOB and “sell” CIF. That is because there are different benefits and costs with each pricing term, especially as they relate to an importer or exporter.

All that aside, FOB (Free on Board) is, generally, the most popular Incoterm since it provides equal benefits and risks to the buyer and seller. 

If you have more experience importing goods and want full control over the process, then EXW (Ex Works) may be the way you decide to go. It does, however, mean that you take on the most risk and responsibility, so we would advise against that if you’re still learning the ropes.

When choosing the right incoterms, you want to get it right. Shipments can face all sorts of problems without the correct incoterm so it’s crucial to think carefully to decide which one is appropriate. 

For example, logistics costs could increase, affecting your profits later on. Alternatively, the buyer or seller may not be able to comply with the incoterm causing issues when you go to pick up your goods and they never arrive.

Summary

Not every business uses the same incoterm, so you have to choose based on what’s best for you. Hopefully, this guide expanded your knowledge and boosted your confidence when it comes to understanding incoterms.

At the end of the day, we recommend working with professionals who know what they’re doing so your logistics and shipping processes run smoothly. It might not be the first stage of product development, but it’s an important one!

If you found this article helpful, don’t forget to share it and subscribe to our newsletter for more useful content like this.

About the Author: 

Ventrify is a product design and manufacturing firm that helps entrepreneurs bring product ideas from concept to market. We take in fledgling ideas and bring them through our iterative design process to create products our clients can be proud of. Then, we work with manufacturing facilities worldwide to bring our clients the highest quality products at competitive prices.

If you have questions about using prototypes in your product development journey or need help, reach out to us through our Website, Facebook, or LinkedIn.

Article by Victoria Fraser

An often overlooked step in product design is packaging; yet it’s crucial. In the same way we all judge a book by its cover before reading it, we also judge a product by its packaging before using it. 

Many inventors or entrepreneurs start with the design of a product itself, but the packaging still needs to be enticing to your customers. And so today we’ll dive into the psychology of packaging design. We will also cover some classic examples to take inspiration from in recent years and decades ago.

There is a lot more to consider than just cardboard and tape. 

Different Elements of Packaging Design 

When it comes to making the packaging design decisions for your product, there is an overwhelming number of things to consider—colour, logo, font, material, and so on. While it would be nice if there was a one-size-fits-all approach, there, unfortunately, is not. 

Let’s take a quick look at some of the different factors to consider.

Colour 

Colour is a crucial part of packaging design. Many researchers and marketers have studied this for decades. In fact, according to one study the four most eye-catching colours that pique our interest subconsciously are red, yellow, green, and pink. 

Some other ways in which colour affects us is how black is considered more expensive and browns are considered more natural. 

Famed German writer, Johann Wolfgang von Goethe, even published his book on the Theory of Colour in 1810. In it, he talks about how colours can invoke certain emotions in our bodies. By appealing to people emotionally, brands can influence their customers’ purchasing decisions directly. It’s also a great way to create brand recognition. We can all recognize a can of red Coca Cola from far away. 

When thinking about colour, it’s overwhelming. Try to reflect on your company values and who you want to attract. Targeting your customer avatar is crucial when making these decisions. 

Visual Design

Products that look more aesthetically pleasing are rated as easier to use than their less attractive counterparts. This phenomenon has been noted in design since the first study discovered it in 1996. 

While this is often in regards to things like websites or user interfaces, it is still something to keep in mind when designing your packaging. People don’t want to be confused. Minimalism was even one of the top trends in 2020 for product design. Knowing this, it’s important your packaging looks appealing and is not overwhelming visually. 

Sustainability

More and more companies are incorporating more sustainable business practices—especially in packaging design. In fact, 66% of people will pay more if a product is more environmentally friendly. Millennials are also a key reason that brands want to embrace more sustainability. 

As a result, some companies have created clever packaging solutions for businesses to choose from instead of traditional plastic packaging. Take the company Bloomin as an example. They’ve designed packaging that is biodegradable and plants wildflowers where it is discarded. 

Now it’s important to be genuine in your marketing if you do this as some companies have seen this backfire and been accused of “greenwashing.” 

Greenwashing is used to describe the practice of companies launching adverts, campaigns, products etc. under the pretense that they are environmentally beneficial. But they’re often in contradiction to their environmental and sustainability record in general.”

—Ethical Consumer

Authenticity is crucial in the modern era we live in, so make sure your brand is intentional with its decisions and accurate, or else it will backfire. Not all press is good press after all. 

Copywriting 

Not only is the logo important, the writing (or copy) on your packaging is also crucial. If your writing is snazzy, then often you’ll get free advertising through amused customers who share it on social media. Using humour is just one example of a great way to stand out among the other brands. 

The writing on the packaging is also a direct connection with your customer. It’s the perfect palace to convey your voice and showcase your brand identity. We all remember those sticks of pink Dubble Bubble gum that had comics tucked inside right? Maybe you didn’t even like the gum, but you probably liked the comic. 

Of course, your writing should always be clear, but don’t be afraid to add personality if it suits your audience. In the case of the comics in the gum, it was a genius way to connect to kids at a candy store while hiding a special message under the wrapper.

Practicality

Yet another aspect to consider is how the packaging might improve the use of your products as well. Sometimes, the packaging itself can become the product! 

One you might not have noticed is that the Classico pasta sauce jars have measurements on the side of them for you to use while cooking. They also launched a social media campaign encouraging people to reuse the jars instead of simply recycling them. 

And this isn’t a new idea, brands have been doing things like this for decades. 

In the 1930s, flour companies learned that parents were using the fabric from their packaging to sew clothing for their children. Brands responded by packaging their products with more colourful and fun patterns as a result. 

Doing something clever like this is a great way to stand out among the other brands. 

Certifications

A final key aspect to include on your packaging is any certifications for your product. Depending on the products and industry, there are a variety of markings or stamps that would be required on your packaging. 

Without these, your product can’t legally be sold in some countries. For example, in the U.S.,  you need to comply with The Fair Packaging and Labeling Act (FPLA) and Uniform Packaging and Labeling Regulation (UPLR). Imported goods also have to follow certain packaging requirements like Title 19

It might seem overwhelming, but thankfully there are packaging specialists who make sure these different requirements met.

Here are the most important things often required:

  • Product Identity Declaration: This just explains what the product is and how it functions. 
  • Net Quantity Declaration: This covers the size of the production in weight if it’s liquid or solid or in a numerical quantity. 
  • Dealer’s Name and Principal Place of Business: As in most places, it’s required that the location the product was manufactured is listed. 

When it comes to Canada, there are also a few unique packaging requirements. Since the official languages are English and French, all products must have bilingual packaging to be sold across the country.

Summary

While this is just a handful of different elements to consider, there are plenty more ways to create standout packaging that appeals to your customers. At the end of the day, we recommend thinking strategically about the demographics of your customer to make sure it resonates with them.

Not every brand will have the same packaging solutions (and if they did we would all be disappointed!) Hopefully, this article opened your eyes to the ways to freshen up the look of your products once they hit the shelf.

If you found this article helpful, don’t forget to share it and follow us on social media for more useful content like this.

About the Author

Ventrify is a product design and manufacturing firm that helps entrepreneurs bring product ideas from concept to market. We take in fledgling ideas and bring them through our iterative design process to create products our clients can be proud of. Then, we work with manufacturing facilities worldwide to bring our clients the highest quality products at competitive prices.

If you have questions about using prototypes in your product development journey or need help, reach out to us through our WebsiteFacebook, or LinkedIn.

Article by Victoria Fraser

There are many challenges to overcome, but today we are going to discuss the mindset – the mental framework – you have…