The idea

So you have a great Idea. That is excellent. The world is full of great ideas. That might sound sarcastic, but getting from a great idea to a running company is a daunting task. Especially if the idea is a technical product that needs a long developing time. Technical start-up companies need a lot of money to get the product to market.
There are two main ways to raise money, without much personal risk: Investment and subsidies.

I will focus on the first today: getting investment.

Lets get into the mind of an investor:

Most of us on this platform are into cryptocurrencies, and therefore we are all small investors. Do you have a portfolio of crypto coins and maybe even other assets to spread our risks? We all know, the higher the risk, the larger the potential reward. The big investors are no different. They want to see the potential money they can make with your business. Most are willing to take a big risk, because the reward will be high. The hardest question you will get is, how much money you will make for them.

The mistakes

It is true that an investors will spend most of their time on the financials. It is probably the first thing they will look at, and it will take them usually an average of 22 seconds, if you pass the first seconds. However, most people don't realise why they look at this first and it is not what you think it is. The real reason they look here first is to see if the amount of money you are asking fits in their portfolio. If you are asking 500K and they only do million dollar tranches, they will not look further and close your case. Of course you would prefer to have millions instead of 500K, but this matters not. If you approach investors, make sure you ask the the amount of money that is in their range. You usually can find it on their website, or look at the companies they previously invested in. If you fall within their portfolio, they want to understand if your numbers add up.

What usually also goes wrong, is that first time start-ups start bragging about how much money they will make. An extensive business case with a high risk reward is not the path to succes. Isn't this what the investor wants? I hear you think. Actually the answer is NO. The investors have seen it all before. They don't believe that you will take 1% of the market let alone 10, 20% or even more.
It is much better to show them a case bottom up. It will show them you understand your product, the market need and who your customer is. It shows much more confidence to make a business case bottom up than top down. In addition, you will also need to give them the market numbers to show them the potential.

What do I mean with bottom up?: Show how big the problem is, how many people experience the problem. Or maybe in your case how many people would use or buy your product, because it solves a problem in their lives. It does take quite a lot of research to find out how large the problem is, and the best way is to go and see it for yourself.

Example

For instance: the market of wound healing is enormous, its worth billions. If I make a new plaster, I can brag I will get 1% of this market, but I'm sure you won't believe me, even though the idea is brilliant. The main question is why and how will you take a piece of the market?

If my plaster is for instance specifically targeting decubitus (tunnelling wounds), I go and spend days with several different nurses and doctors that treat these wounds, go to different hospitals, nursing homes and home-care nurses. Ill talk to people that have these wounds. Now, I get to understand how my product can fit in their world. I can show the investors why these nurses would use my product, why my patients would prefer it, how many people come to these nurses with these tunnelling wounds. I see for myself that the wounds don't heal for weeks and months, and get treated twice a week, sometimes even twice a day. I can calculate bottom up how many people would need this product, how often they would use it. Another benefit to really looking at the business bottom up is that you start talking to your customers immediately, start to understand how the product needs to fit into the system they have, or how it will disrupt the current system in a positive way, how much education the system needs to penetrate the status quo, you will stand much stronger facing any investor, if you understanding how you will take the market, and why the numbers make sense.

I hope you enjoyed my advice. I am giving free advice about starting a start -up and running it succesfully. If you have any questions or request to cover, I am happy to answer.

Background: Im a PhD in Medicinal Chemistry and have studied project management. I launched many products with international teams in multinationals. I utterly enjoyed working as a program manager under the CEO in a start-up company that was sold for $250M.
Currently I'm building a start-up company, that won many (subsidy) grants, and pitch awards. It launched its first product to market in December 2017 within two years