Angel Investors, Venture Capital, Crowdfunding, and Patents: A Guide

Angel Investors

An angel investor (also known as a private investor) is an individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.

Venture Capital

Venture capital is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange for equity in the startup. This is most commonly found in high growth technology industries like biotech and software.

Crowdfunding

Crowdfunding is a way for people, businesses and charities to raise money. It works through individuals or organizations who invest in (or donate to) crowdfunding projects in return for a potential profit or reward. Investing this way can be risky.

Patents

A patent gives an inventor the right to stop other people making or using their invention. If someone makes or uses that invention without being allowed to, the inventor can sue that person in court to make them stop. In general, a patent has a 20-year lifespan, but this isn't guaranteed. There are a few reasons that a patent can be invalidated by the courts. A patent may also expire if the owner doesn't pay the maintenance fees at the proper time. Software patent, Electrical engineering patents, E-commerce system patents, Mechanical patents, Method and process patents, Design patents

Stages of Development

Each Stage is designed to learn and collect specific information to advance the project to the next Stage or decision point.

Stage 0 – Discovery

Activities designed to identify new business opportunities and generate new product, service and technology ideas.

Stage 1 – Scope

Quick, inexpensive preliminary investigation and scoping of an idea – largely desk research – to better define the concept, assess technical feasibility and to gain insights into commercial prospects.

Stage 2 – Business Case

Detailed investigation involving primary research and experiments – both market and technical – leading to a Business Case, including product/service and project definition, project justification, and the proposed plan for development.

Stage 3 – Develop

Detailed design and development of the new product or service and the design of the operations or production process required for eventual full scale production. Several alpha iterations of the prototype.

Stage 4 – Test and Validate

Tests or trials in the marketplace, lab, and plant to verify and validate the proposed new product, brand/marketing plan and production/operations. Several iterations of the beta prototype.

Stage 5 – Launch

Commercialization – beginning of full-scale operations or production, marketing, and selling. The transition from the innovation to the Product Lifecycle Management process

Innovation Funnel

An innovation funnel is used to describe the steps that take place in developing a process or product. The purpose of all innovation is to create processes or products that meet market needs in manufacturable or economic forms. In the initial stages of development, some ideas are collected which go through a refinery system. After refining, a few ideas are left which the company implements. The ideas that remain after refining are combined to come up with a new concept

Pivot

A pivot is essentially a shift in business strategy to test a new approach regarding a startup's business model or product after receiving direct or indirect feedback, and it's one of the fundamental concepts of lean startup methodology.