How to Secure Investors for Your Product-Based Business
Plenty of people have product ideas, but only the best-executed ones make money. It takes money to make money, so securing funding is a hot topic for entrepreneurs. Businesses can work with investors to support their growth and leverage valuable expertise. Venture Capitalism has become so mainstream that it is the premise for the international reality show, Shark Tank. The show features on-air pitches to a cast of veteran investors- aka the Sharks. As product development specialists and fans of the show, we have an outlook on how to secure investors for your product-based business. Shark Tank is just one example of an investment avenue, and the principles that lead to success on the show apply to all potential investors.
What To Know When Applying to Shark Tank
There is no larger televised stage than Shark Tank. Bold pitches are shown to investors and viewers and the most market-driven and scalable ideas secure a deal.
To participate on the show and get the attention of investors, interested businesses fill out a preliminary application (you can see an example on Shark Tank’s official casting site). Then, producers sift through applications and watch recorded pitches to decide which companies to hear out in the Los Angeles studio. Shark Tank receives over 40,000 annual applications for 158 spots. Businesses must stand out by validating their concept, knowing their numbers, and telling a compelling story.
Applying to be on Shark Tank involves completing paperwork and recording pitches for producers.
Validate Your Concept
A business must generate hype before appearing on the show. Start with a Minimum Viable Product (MVP) and seek validation such as sales traction, industry recognition, or intellectual property protection; Anything that will illustrate the demand for your invention. For example, build an extensive customer list, collect real testimonials, or find an industry personality to vouch for your product. To validate your concept you need to start by getting your idea in front of people, either physically or digitally. Samples and demonstrations are excellent ways to spice up a presentation or video and demonstrate your product simultaneously. Demonstrate how there is a clear need and your company offers a proven and scalable solution.
See real stakeholders engaging with products at the Beyond Design office.
Know Your Numbers
Knowing the business’s financial numbers is crucial once you’re in front of potential investors. Enter with a clear financial ask, market evaluation, and operational strategy. The Sharks are not primed with any information about your business, so your pitch must tell them who you are and how you plan to use an investment. Anticipate difficult questions and prepare thoughtful responses for different scenarios. Serious investors will probe details like pricing structure, profit margins, and scalability to evaluate if there is a real Return On Investment (ROI). Be sure to rehearse extensively to demonstrate confidence in your product and the business you built.
Explain the market opportunity and business model to convince investors of a worthwhile ROI.
Tell Your Story
While Shark Tank is about business investments, it is still a reality show. Producers will favor entrepreneurs with a rich narrative and prioritize their screen time. The same applies to non-televised investors who may prioritize memorable narratives over impersonal pitches. Remember, they are not investing in only products; they are also investing in the people behind the product. Sharing your personal journey, motivation, and values gives investors a more holistic understanding of you and your vision. Building a personal relationship with a common interest or cause will set a company apart from other pitches. The approach can revolve around the inventor or the end users who benefit from the product. Lean into your story and passion as to why your business is important and warrants attention.
Shark Tank evaluates more than just products, it assesses the entrepreneurs behind the idea and execution.
What To Do Post Pitch?
The public exposure gained from product pitching is a gigantic benefit. Whether a deal is made or not, success comes from laying the groundwork for future growth. Be prepared to walk away with an investment partner or independently with millions of new potential customers watching. In both scenarios, leverage the experience as a platform to reach a wider audience. If you pitch on a televised program, proactively prepare for “the Shark Tank effect” where companies see a drastic boost in daily revenue the days after their episode airs. Even if your first pitch is unsuccessful, there is a precedent for inventors to return seasons later with more experience and an adjusted pitch. The ability to secure funding and gain support for your product is a testament to the resilience and adaptability of entrepreneurs and their ideas.
For example, a client of Beyond Design, Erin McLaughlin, was determined to pitch to investors. Her invention, the FlagGuard, keeps swimmers in sight in large bodies of water. Erin applied to be on Shark Tank several times. Producers didn’t respond to her application but being a driven entrepreneur, Erin went out of her way to attend open casting calls in California. Erin gained valuable product-pitching experience and proved she is as unwavering as her product (available at FlagGuard.net).
Erin McLaughlin and the FlagGuard embraced Shark Tank as an opportunity for exposure and feedback.
In Summary
Pitching to noteworthy investors is a dream come true for inventors seeking to grow their businesses. Success hinges on the intersection of preparation, storytelling, and perseverance. It’s essential to prove the validity of your concept, clearly explain your Key Performance Indicators, and forge a meaningful story. Success requires a great product and business plan, so practice and lean into this investment and media opportunity.
As industrial designers, we encourage aspiring entrepreneurs to not only aim for the show but also use it as a stepping stone to propel themselves towards long-term success. With determination, a thorough business model, and solid product development, you can become an inventor who secures an investment for your product-based company.
Learn more about our work and expertise at beyonddesign.com
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