Why ideas don’t get investment.

Tuesday, June 18, 2013 14:53

Investment for a good idea

“I’ve got a great idea; it will make millions, guaranteed. I haven’t got the time myself to pursue it, so I’m looking for someone to take it on. Maybe I could licence the idea, or sell it. I don’t actually want much, I just want to see it made.

“No, I haven’t got round to doing a business plan, not sure where to start on that anyway, I’m more of an ideas person and of course I am a bit careful about telling anyone about it in case they steal the idea.”

 

Sound familiar to Investors? Any entrepreneur thinking “what’s wrong with wanting to sell an idea?”

Let me give 5 reasons why ideas don’t get investment:

  1. Good ideas are 10 a penny. Everyone you meet in the street or bar, has a good idea.
  2. By themselves ideas have no value. They are not rare, they are very common.
  3. They gain value as you do work proving that an idea will practically and commercially succeed.
  4. You should be able to contribute more to a venture than just the idea, your expertise, skills, background, experience and effort will give an Investor more confidence that the concept will work.
  5. Ideas by themselves are high risk, the highest of risk in fact. Investors have plenty of choice where they can invest their money; they don’t need to take that high risk.

Right, so you’ve got a fantastic idea for a new product or service, it will take some investment to turn the idea into a business, what do you do?

  • Even with no funds you can do market research. Don’t ask your family or friends, talk to real potential customers, think through your target market (see How to market smarter ), construct a marketing plan. This all shows an Investor that the concept is likely to be viable.
  • Do work to move your idea forward. Build a prototype product or start a basic service, to prove the idea works in reality.
  • Get some sales. Even if just a few, or obtain some advance orders, or letters of intent to buy. This more than anything is the big difference between securing funding or not. Not every good idea is a commercial good idea. Showing that customers will hand over their hard earned cash moves the idea from fantasy into an investable business.

 

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