Raising capital for your IoT company? How to improve your performance

Al Sisto

Blog by: Al Sisto - 4 / Oct / 2019

Raising capital can be one of the most exciting times in any business’s life – and one of the most fraught, stressful and overwhelming. IoT capital investment is a competitive world and you are going to want to perform at the highest possible level. The question is – how?

There’s no single secret to raising capital for your IoT company, but there are plenty of strategies you can deploy to give you an edge.

Demonstrate a tangible prototype

Almost every investor is going to want to see more than a nice theory on paper if they are going to part with their precious cash – and that means that you need to develop a prototype. Of course, building new hardware doesn’t come cheap, so you may be in the chicken-and-egg situation of needing to raise capital in order to develop the prototype needed to raise further capital. This is where crowdfunding models can really come into their own, particularly if you have an especially inspiring or interesting back story. Similarly, angel investors are well-versed in funding entrepreneurs through the very earliest stages of prototype development. Don’t forget that prototyping tools such as Raspberry Pi can be an invaluable and cost-effective way of getting IoT devices and sensors off the ground at an early stage.

Demonstrate customer approval and excitement

There’s little better than buzz and anticipation from potential customers to get early-stage investors interested in your IoT product or service – so leverage this in every way you can. Once you have some prototypes in place, get them actively deployed and trialled, and gather as much positive feedback to showcase to potential investors as possible. This is, of course, the time to draw on as many influential contacts as possible. Ultimately, the more you can demonstrate genuine excitement in the marketplace for your product or service to be rolled out more broadly, the more attractive you will seem to potential investors.

Demonstrate customer feedback and refinement

However, deploying your prototype in situ is also a crucial part of your product development and testing lifecycle. It is vital that you take on board all feedback and comments gathered throughout this initial deployment and, where necessary, use them to refine and enhance your product. This demonstrates to potential investors that you have a responsive approach and that your product has been truly tailored to the needs of the market.

Demonstrate monetisation

Absolutely crucial raising capital for any IoT company is a demonstration of monetisation. This is vital in any business sector but it is particularly pertinent when it comes to the IoT because so many start-ups, no matter how innovative, struggle to translate that innovation into cold hard cash. For every Amazon Echo, which has become a true consumer IoT success story, there are countless IoT gadgets which simply haven’t made the transition from ‘a bit of fun’ to a must-have item.

Yet there are multiple paths to monetisation in the world of IoT. Whether your business helps individuals or organisations to save money through increased efficiency, or helps other businesses to generate new revenue streams, there are plenty of ways of generating tangible value in this dynamic sector. The trick to raising capital successfully is to highlight that route to monetisation front and centre.

Topics: IoT, IoT investment

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