The Difference Between Funding for an Intangible Versus a Physical Product
If you’ve ever tried to sell an idea or a concept, you know how difficult it is compared to a physical product someone can touch, feel, and literally see the value.
Think of selling an item in a store, like a headset or earbud, compared with selling life insurance or consulting expertise. When people are buying an intangible, the salesperson has to work harder to create value in the buyer’s mind, since the buyer has to perceive the value rather than touch or see it.
The same applies to your funding efforts; at the end of the day in order to raise money you’ll need to sell your idea to the investor. That may be individual investors or venture capitalists. Selling an intangible idea means you have to work harder, and smarter, than selling a physical product.
Here are a few things to keep in mind as you figure out how to get your idea funded…
- Have a clear list of assets
- Your message needs to be dialed in
- Be specific with the numbers
- You must be known or have an easy to find profile
Have a Clear List of Assets
In order to get from promising idea to a sellable product or concept,you must be innovative and really know how to sell your assets.
That means describing your intellectual property, employee expertise, and business methods in a way that helps your investor really ‘see’ your idea come to life. That’s easier said than done, but there is good news — you are not alone.
“It is estimated that … as much as 90% of the value of the world’s top 2000 enterprises will consist of intellectual property” ~Price Waterhouse Cooper
In the technology and innovation business world, selling intangible ideas is getting easier. In order to do it, though, you must have your intangible assets nailed down. The path will often look something like this:
- Trademarks
- Patents
- Unique Design
- Unique and easy interface
- Customers
- Contracts
- Artistic concepts
- Trade secrets
To raise funds for an intangible/innovative idea, you need to generate more information about your idea and the benefits than you do with a hard product — and you may have to disclose some of that information that makes you uncomfortable. You can’t show your investors a product, so you’re going to have to ‘give away’ some of your ideas to sell them on your concept. Doing so gives investors a better picture of exactly what your concept will be like when it comes to life; it will enhance the perceived value of your idea.
Your Message Needs to be Dialed In
When generating your “marketing” information, you need to work hard to make sure you perfect your message. That means clearly communicating the “problem” that you have invented a “solution” for. You need to be a crystal clear storyteller so that your idea comes to life in your potential investors’ minds and they can see how it will work to create your solution.
Be Specific with the Numbers
Be very specific about exactly how much you need to raise, and exactly what it will do. Remember, you do not need to raise enough funds for a 10 year plan; you need to raise enough to complete phase 1 of your plan. If you do this right, raising funds for phase 2 will be easier. Have good, clear milestones that you believe you can achieve, and that you can easily explain to your potential investors.
You Must Be Known or Have an Easy to Find Profile
Make sure that YOU are a known entity. If you’re savvy enough to evaluate crowdfunding as a means to fund your concept, you hopefully have taken some time to build your personal brand and network before you begin to ask for funds. If you are looking to raise big dollars, your investors will want to know about you, and how you think. You need to make sure that they can find evidence of you and, in particular, your business acumen, before they open their wallets.
You obviously need a website, but the next, best step to take is to write, online, consistently about your concept and how you will bring it to life. Since so much of investment of any kind is about trust, you need to give people ways to build a relationship with you.
There are basic steps that every crowdfunding campaign must take to be successful, but for intangible ideas you need to be even more precise when creating the campaign. Luckily there are many examples of intangibles that have been wildly successful that have gone before you. Investor’s minds are open to your idea, you just need to sell them on it.
WeGreenlight.com is a platform to help you validate your ideas, get feedback, and launch with early adopters. Join us and let’s help you launch your idea successfully.
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