Raising capital for prototype testing

Funds are very important during initial days to launch a prototype. But where do you arrange such funds? Neither the angels entertain you, nor the VC wants to evaluate you.

Published: 06th December 2018 03:48 AM  |   Last Updated: 29th December 2018 01:57 AM   |  A+A-

Express News Service

KOCHI: Funds are very important during initial days to launch a prototype. But where do you arrange such funds? Neither the angels entertain you, nor the VC wants to evaluate you. It becomes a chicken and egg story. Where you won’t have chicken (funds) until you have egg (prototype) and you won’t have an egg until you have a chicken. So how should you go about it? Here are top three ways you can arrange your initial funds for prototype testing:

Startup India Program 
A lot of state governments have launched their own funds, some of which are even grants to develop prototypes. All you have to do is register as a startup with Startup India portal. You can find more information on such schemes on Startup India website as well as your own state’s startups related website. You may even contact your nearest Government recognized incubator for such queries and they would be able to guide you. 

Family and Friends
Most startups raise initial funds through family and friends. We often have college and work seniors and family members and relatives who are interested to help us out in initial days. Then why not give them an opportunity to be a part of your dream? You can decide how much you are looking to raise for your initial prototyping phase and raise that through family and friends. What this means is that you collect a pool of money from contributions from your family members and friends in return for initial equity in the company. 

Crowd Funding
No matter which industry you are in and no matter what product or service you are building, I am sure you have already thought of who your target customer is going to be. Then why not let them pay upfront for your product? Something like a preorder campaign. 

Why not let your future customers commit an amount and help you bring your dream to life? Although crowdfunding sounds like a Western concept, it has been popular in India from centuries. Remember how those kids walked up to you during Dussehra and Holi to gather donations for setting up a statue in your locality? And how your society president collected funds for building some infrastructure? That is crowdfunding. 

The crowd paid up for a project that they wanted to see come to life. You yourself have funded many such projects. Then why not try this for your own project? 
Rajeev Tamhankar is an IIT-R alumnus, ex-Flipkart, Xiaomi and the founder of TBS Planet Comics

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