What is the key to securing a large investment in a project? How much should I offer the investor in return for his risk?


2

Let's say all of the following conditions are true:

  • I have the connections needed to get audience with multiple multi-millionaires, although I, myself, am not one.
  • I have, in concept, designed a product set that will allow me to sell computers with 2x the power for 1/2 of the cost, to anyone who has access to 3G+ internet, and this performance/cost enhancement will remain accurate even after years of technology advance.
  • While further detail can't be given, assume, for the purpose of this question, that the above factor serves as only 30% of the product's full feature value. This product set includes other never before produced features that increase the value, but have not been included in this question for simplicity.
  • I possess, in great detail, documentations on every aspect of the development stage and can explain fully every step that needs to be taken for each feature's development within this product set.
  • All hardware is modeled in CAD accurately, and experimental concepts have been prototyped and tested, although I need heavy funding to produce the full product prototypes.
  • I possess professional graphic presentations that present this entire project neatly and beautifully, showing the stats, necessary funding needs for each specific stage of development, and a business model for the production and sale of the products.
  • I've calculated the profits of the sale of the product to be $10 per user/month for the first 3 years and $40 of profit per user after 3 years, resulting in $1mil USD per month profit with 100,000 pre-3-year users and $4mil/month per 100,000 post-3-year users.
  • The project's total rounded development cost runs at 4 million dollars, which will support a 2-3 year development phase and all legal fees needed to heavily protect and market the idea.
  • There are many advanced program features within this product that will allow the project to stay far ahead of anyone in upcoming years that attempts to run a similar venture.
What factors then, will decide whether or not I should succeed in securing the required investment? Consider the numbers shown above. For that level of projected profit and sufficient data supporting the popularity and use of the product, how much should an investor expect in return for his $4 Million USD risk? 10%? Afterall, that's what Steve and Woz agreed to with their primary investor. 30%? It is, of course, a large risk, albeit with very very large possible return ratios. 50%? It seems as if this might be very steep, but it it is his money, and he can do what he likes with it. How much is too much?

Getting Started Ideas Investors Computers Shares

asked Oct 27 '13 at 03:01
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Jonathan Todd
28 points
  • How long do you project it will take to get your 100,000 users? – Joel Friedlaender 4 years ago
  • Let's assume that current data supports 10,000 users at 12 months and upward of 30,000 at 24 months, hitting that number of 100,000 a little past 36 months. – Jonathan Todd 4 years ago
  • All of the above being post 2-3 year product development. – Jonathan Todd 4 years ago
  • I'm not saying don't do it, but you're talking five or six years out, which is lifetimes in the technology world. Don't you have a way to aim for a smaller milestone in advance of that somewhere, so that you can get the users coming in sooner? – rbwhitaker 4 years ago
  • @rbwhitaker That's a good point. I should edit my parameters for accuracy: "This product will provide 2x the computing power for 1/2 the cost, even if computers have doubled in power and halved in cost by the time the product is released." – Jonathan Todd 4 years ago
  • So for the simplicity of this question, let's assume that the project doesn't include pre-completion milestones, but the value of the product isn't relative to the increase of technology over the years. Simply an enhancement of any and all improvements. – Jonathan Todd 4 years ago
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