Phase 3: Fundraising

Michael Wilkinson, March 28, 2022

Paragon Innovations’ Series:

12-Stage Product Development Process

From Start to Success

Paragon Academy’s second module centered around how inventors can effectively research their product development process. In the series’ next phase, the Vice President of Paragon Innovations, Mike Wilkinson, narrows down the process of financially backing a project with assistance from guest speaker, Blake Petty, Executive Director of the Aggie Angel Network.

Where Should Funds Come From?

Mike comments that “There are plenty of other fundraising opportunities, from debt financing to private equity to crowdsourcing to IPO’s [initial public offering].” Common financial sources used to back a product development process include:

• Friends and Families
• Credit Cards
• High Net Worth individual(s)
• Crowd Sourcing
• Angel Investor Groups
• Venture Capital
• Public (IPO)
• Others (credit cards, banks)

After family and friends, a lucrative fundraising avenue that inventors should investigate are angel investors. Blake defines angel investors as “Private investors who want to contribute in an equity fashion, invest in brand new, usually technology-based businesses.” Blake continues to say that angel networks can be found throughout the nation and that some angels can invest up to $500k individually. 

What is a Pitch Deck?

Raising funds for your product revolves around the ability to communicate the value of an inventor’s solution to an audience. Also known as an elevator pitch, a pitch deck is a critical organizational tool to effectively translate the value of a product. “It's the 10, 20, 30 rule,” says Blake, summarizing Guy Kawasaki’s tips for a successful pitch deck, “It's a 10-slide maximum, 20 minute -maximum, and 30-point font.” Blake explains that a slide deck is a convenient way for inventors to convey pertinent aspects of their product in a visual format, without overwhelming their audience with too many fine details.  

Slide Deck Contents

The purpose of a pitch deck is to provide potential investors with succinct information that can help visualize the benefits of a product, service, or goal. A successful slide deck will include 10 slides for the main presentation (not including backup slides), 30-point font to help limit the amount of information per slide, slide numbers and a master slide template throughout the presentation, and graphics where appropriate. The content of the slide deck should also include:

• A brief title slide with one graphic of the company’s logo or an image that depicts your product’s vision.
• An agenda slide that covers what will be presented within the pitch.
• An Opportunity/Problem/Pain Slide that addresses the opportunity or problem within your product’s applicable market(s).
• A Solution Slide that presents your product’s intended use and advantages.
• A Customers Slidethat defines the specificities of your product’s intended audience and potential users.
  • References should be included within this slide for increased credibility
• A Customer Testimony Slide can be incorporated if your product has already been introduced into the market.
• A competition or Alternatives Slide is a crucial aspect of a pitch deck. Competitors and alternatives show that similar products are in demand, and you will have the opportunity to provide evidence of why your product is set above the rest.
• An Unfair Advantage Slide presents whyyour product, strategy, team members, or industry relationships give you an “unfair” advantage over others.
• A Development Team introduces the strategy of your development team.
• A Market Size Slide presents the economic environment surrounding your product.
  • Use specific data and credible sources
• A Market Research Slide talks about the advocates, key persons, and speakers that can clearly communicate the advantages of your product
• A Revenue Model Slide addresses costs, margins, and expected net profit of initial and volume production.
  • Use examples for sales projections and price points.
• A Marketing Strategy Slide defines advertising avenues for your product likeSEO (search engine optimization), Adwords, print magazines, newspapers, events. Local or national?
• A Distribution Methodology Slidedefines the distribution avenues of who and how your product will be shipped.
• A Use of Funds Slidedefines how fundraised monies will be allocated in areas like product development, marketing, facilities, salaries, advertising, utilities, and so forth. 
  • • • It is encouraged that inventors include a modest salary so that investors may see that you are vested in the company/product. 10 – 20% should also be included for any revisions throughout the process.
• A Management Team Slideidentifies important individuals, consultants, and employees within the project.
• A Financials Slide should provide top-level financials, and you should be prepared for more detailed financials. 
  • A 3-5 year profit and loss projection should be included.
  • Back-up slides should include P&L / Cash flow / Balance Sheet for the same period.
• An Exit Strategy Slide provides information on your strategic exit. Do you intend to sell the company, initiate an IP, or produce regular dividends to shareholders?  
• A Board of Directors Slide is optional to include for very new startups.
• A Milestones/Schedule Slide defines set dates for goals after funding is provided.  
• A Roadmap Slide allows investors to visualize the “big picture” of the long-term evolution of your product. This includes product upgrades, accessories added, etc.
• The Next Steps and the Call-to-Action Slide tells investors how they can get involved in the next steps of the project.
• Backup Slides include more supportive detail and data regarding first 10 slides.
  • Information on back-up slides should be well-sourced and referenced.  

If you found the Fundraising Phase beneficial to your development process, stay tuned for Paragon Academy’s next module, Phase 4: Architectural and Requirements Gathering, where we provide a detailed explanation of compiling a requirements document.

About Paragon Innovations

Founded in 1990, Paragon Innovations is a leading provider of engineering and design service consultation. Paragon Innovations serves Fortune 500 companies and startups in developing turn-key product solutions. As a three-time winner of the Aggie 100 Award, Paragon Innovations’ skilled team is unmatched in their level of expertise and product management capabilities. Acquired by TTI, Inc. in 2021, Paragon Innovations joins the Exponential Technology Group (XTG), a collection of electronic component distributors and design engineering firms that collaborate to enable the development of modern technologies. XTG is a subsidiary of TTI Inc.’s Family of Specialists: TTI, Inc., Mouser Electronics, Symmetry Electronics and Sager Electronics.