Paying for something that earns nothing yet.
WHY IT IS DIFFICULT
Expenditure is certain and return is not.
WHAT SOURCES EXIST
Profits from existing business
Customer funding: deposits, pre-orders, development contracts
Grants and support programmes Investors Debt, in limited circumstances
WHY DEBT IS DIFFICULT
Lenders require servicing from revenue the development does not yet produce.
WHAT CUSTOMER FUNDING PROVIDES
Money, and validation simultaneously.
WHY IT IS THE BEST SOURCE
A customer paying for development has proved demand.
WHAT TO CONSIDER
Developing for a specific customer who funds it, retaining the right to sell it more widely.
WHAT TO ESTABLISH IN WRITING
Who owns the result Whether you may sell it to others Any exclusivity, and its duration
WHY
It determines whether you built a product or performed a service.
WHAT GRANTS TYPICALLY REQUIRE
A defined project Matching contribution Reporting Compliance with conditions
WHAT TO ASSESS
Whether the administrative cost justifies the amount.
WHAT INVESTORS REQUIRE
Ownership, and eventual return.
WHAT TO ESTABLISH
What they expect, and over what period.
WHAT TO BUDGET
More than estimated.
WHY
Development consistently costs more and takes longer.
WHAT TO ESTABLISH
Staged funding tied to progress.
WHY
It limits exposure and it forces honest assessment at each stage.
WHAT TO PROTECT
The existing business.
WHY
Development funded by starving operations destroys the source of funding.
