A friend of mine, Aggie, along with an Aggie business partner, have an idea for a product. Their invention seems very promising as they have many years in the industry in which this product will be used. They have also spent considerable time discussing the idea with many people who would potentially use and benefit from the idea. They've done their due diligence and have started the patent application process with an attorney.

Do any of you have input regarding raising capital? They definitely are not interested in any kind of gofundme. They want investors / firms interested in a return. Both very honorable, hardworking, great men.

I thought at one time I'd heard of an Aggie investor organization?

Any input is appreciated.

Thank you.

Edit: Patent is not pending. However, paperwork toward that has begun with an attorney.

What industry?

aggie028 said:

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What industry?

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Athletic / Sports training. They have spoken to close associates at the high school and college level of athletics. Those discussions encouraged them to proceed.

Thank you. Very good advice and I will pass it on.

They are really avoiding friends and family as they don't want to take advantage of friendships. I've known one of them for many years -- worked for him part time. I am actually interested and he is adamant about not taking money from friends as he doesn't want potential hurt feelings. He is a very solid, upstanding, hardworking, and honest person.

I really do like the idea and he has done a great job talking with many potential end users who have encouraged these two to continue.

why the opposition to crowdfunding? gofundme is typically a "gift" but there are business related crowdsources like kickstarter, etc


and athletics/sports training... equipment or apparel/shoes?

If unwilling to take friend's and family money at $X per share of the company, then Kickstarter unless they want a PE involved early that will probably cost them a lion's share of the ownership.


Could also look to self-funding with a loan and operational line of credit. If going this route, they will almost definitely have to personally guarantee the LOC and have some sort of assets to collateralize as security on the loan.

Good point in crowd sourcing - I don't have any experience there but I need to get up to speed and have seen good results - not sure what the success rate is - that would be a great data point and telling indeed

Kickstarter is a good one to explore. Thank you.
The idea involves sports equipment.

hillcountryag86 said:

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Kickstarter is a good one to explore. Thank you.
The idea involves sports equipment.

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Know of an individual that used it successfully to publish a D&D type game/book. Found his niche and got more money than he needed quicker than he expected.

If going the Kickstarter route, you really have to focus on the salesmanship and marketing of the campaign. Look to Reddit, market specific forums, TexAgs, etc.

Good point on F&F - but no one plans defeat and I'd feel bad losing anybody's money if it came to that - turn F&F into a positive: excellent motivator and do your due diligence as if it were your own savings

In the end risk is unavoidable but can be hedged - commit to repaying every F&F investor should you fail regardless of fault - I have a PE friend who repaid every investor/creditor on a failed acquisition and it taught me a lesson. On his second go round he limited equity/liability and it saved a lot of grief.

And leverage your assets - one option is have vendors contribute work for equity - building dedicated partners - but a narrow option with downside as well

Good luck to your friend let us know how it progresses

Thanks to all for your comments and feedback. I am one the partners/inventors and wanted to post in response to the crowdfunding/kickstarter route. I think we have valuable assets in the due diligence we have done, and those who are willing to support us, but my concern with taking it to those platforms, is that though we are in the beginning stages of the patent process, because currently we are at an idea, and not a product or even a prototype, is it safe to go to those platforms as far as intellectual property is concerned.

The last thing we want of course is given the investigating we have done, and considering the opportunity it presents, we don't want anyone with the funds to create our invention, to run us over, take our idea, and do it themselves.

Thanks again for all comments.

1) Get patent
2) Build prototype
3) Approach major industry player to sell patent but retain a residual
4) ????
5) Profit

I hate to come off as a pessimist, but if this product has a great application and ability to be a changer in sports, you'll get eaten alive by the majors if they see an opportunity in the market. They'll price you out.

Pessimists are welcome! We know this is going to be true, but without a prototype, there is no way to patent this idea... and that's the unfortunate reality. We are seeking funding to produce a prototype, so technically steps 1 and 2 are reversed, but we agree everywhere else.

Thank you!

How much are you projecting the prototype to cost?

ColinAggie said:

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How much are you projecting the prototype to cost?

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i like sports. i am in for a few bucks.

although it may be a conflict of interest #justdoit

nm

The stage you are at is normally the F&F round, if that isn't an option then potential sources are:

1. Credit card
2. house loan
3. Cash in some investments (lots of new entrepreneurs don't want to do this due to risk, but using a portion of your own capital is pretty powerful)

Once you at least get a prototype on paper with some good market analytics (Letters of Interest are really good, ie, if you build it they are interested in buying it) then reach out to Aggie Angel Network

http://aggieangelnetwork.com/

Right now you are considered pre-seed (sounds like), the "typical" sources of funding for each stage are:

Pre-Seed (we have a great idea!) - Kickstarter etc, F&F, self fund
Seed (we have prototype or have it designed) - Angel groups
Series A (prototype built with either some market traction or very strong market interest / demand) - VC or family office

Investors at each level are expecting the risk inherent in the business and thus will price the investment appropriately. The rest takes care of itself. Startup Aggieland also is an exceptional source of information and guidance. Really strong team over there.

Good luck!

This is the internet man... Everybody is clicking because they want you to spill the beans on your product so they can tell you why it won't work.

How are you going to sell the product ?

Direct to consumer thru Amazon? Build momentum with a kick starter campaign.

Sell thru retail ? Then get a prototype and patent and you need a commitment or letter of intent from Academy, ***** or similar then you can get funds to produce and market

Selling to Nike, UA, Reebok, etc? See above. Prototype, patent then go meet with them and get proof of interest. Then raising money becomes possible.

Congrats! Be sure to come back and share the details about the product when you can. A lot of us are intrigued!

I'm a corporate attorney representing many emerging companies at this early stage. Would be happy to answer any questions as they come up.

It's my favorite practice area.