Recently I spoke to some people about commercializing some software I was helping develop and the discussion was very short. After the discussion I remembered a lesson I learned in 2000 after I’d tried to ’sell’ an idea to get funding.
What I remembered is that it is all about numbers. You could be selling a ‘fart in a jar’ and as long as the numbers are good you probably have a chance. Focus on the numbers and don’t spend a great deal of time on describing the service or product - or at least leave that to last. The investors are looking for a ‘risk to reward’ that suits them. Give them this information first, and if asked, tell them what the product or service is. They will probably want to know, but after the numbers appeal to them.
What numbers will they want to know?
- How many ‘farts in a jar’ do think you will sell over 1, 2 and 5 years?
- How much will people pay for a ‘fart in a jar’?
- What is the cost of putting a ‘fart in a jar’ and delivering it to the purchaser?
- How much of the ‘profit’ will they get?
- How much money do they have to risk to get that ‘profit’ and in what time frame?
There are some other things that investors will want to know like the competition and if there are other risks involved in getting a ‘fart into a jar’ etc etc. However, my experiences suggest this will be of secondary value to the numbers.
On another note, does anyone know a good way of finding out what someone would pay for a service (not a ‘fart in a jar’) ?