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How can I gain funding without any income or product?

I want my primary source of raising funds to be through crowdfunding. However, many startups make the mistake of launching with promises, and not any actual product. I wish to launch with something to show, not just promises.

The issue is that my startup is in a loop: I have no product because I have no income; I have no income because I have no product.

How can I secure funding to build a product, when I don’t have a product to show? How do I explain to investors and lenders that I will make the money back once I furnish the office, put together the team, and produce a prototype - and not before?

(NB: I do have income from contributors, but it’s insubstantial)

Answer 1044

Preparation is key to success. Project + Network + Funding + Goods = Success.

You need a plan, design, concept, prototype, pictures/video, stages and goals to seed your campaign. Also a core social network to fund the first 30% to kick things off to give you a chance of gaining critical mass.

Product development generally works something like this: Have an idea. Create a rough concept. Storyboard. Design. Build some cheap fake prototypes. Test the prototypes with users to get feedback on what works, what doesn't and ideas for improvements. Do that a few times to gain enough information to refine your concept and design for the next stage. This iteration process reduces the costs of building your working prototype and the end product. Apple uses this low cost prototyping method to test out new product ideas. It's the same model that Game Development uses. See the video "prototyping, fake it until you make it" here.

Have a clearly thought out project, business, marketing and financial plan, including any risks, with respect to the project, that answers all the questions that anyone funding it would ask.

Crowd/angel funders will want to see you've done your homework, unless they really like the idea and/or believe in the team. That's where a video could help.

For most products that means building at least a small scale version and having a plan how you will scale up.

You could benefit from the type of help that a business incubator gives to refine your plan.

With all due respect it's naive to think that you will make the investors money back once you have a prototype. The prototype is the low cost bit of any development. Once you have that you start spending real money. That's when the investment campaign comes in.

It's important to choose the crowd funding platform that best fits your product and audience.

Start building your social network early before you launch your campaign. Ask yourself can you find an audience for your product/project first. Get them to help you refine and set your goals. Since you will be delivering the product to them and they are making the decision whether or not to fund you it makes sense to have your product features in-line with what your audience wants.

Use every free tool you can to push your project forward.

Answer 1107

Notice there's no requirement for "office" and "team" on this diagram, especially before the fake prototype stage.

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Answer 1045

Seems like you have the funding model backwards.

You want: Funding -> office -> team -> prototype -> product -> deliver.

Whereas crowd funding tends to be more like: Concept -> Prototype -> Social network -> Funding Campaign -> Product -> Deliver.

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