VC and inventory

[Feivi18]

Hi everyone,

It's my first time here and I'm hoping some of you can help me! I'm developing a technological consumer product and an getting ready to pitch it to vc's. The thing is, how much inventory should I be including in the amount of funds I'm asking for? Let's say I invented digital picture frames before anyone else did. I'm ready to buy the components to make them, but I need money from the VC to buy the components. Components and production will cost me $100, and I can sell the product for $200. Production takes 4-6 weeks. Thing is, I have no idea how many of these I'll sell the coming year. It could be 10,000 units, could be half a million units. So what do I ask the vc's for?

Thanks in advance for helping out a confused entrepreneur!

Feivi

[jasaunders]

It sounds like you are way ahead of yourself. VC's don't want to invest in ideas. VC's want to invest in people and businesses. It seems you don't have this yet. What you need to do is put up some of your own money, get money from friends, family, banks, etc... to at least get your business started. Get some prototypes made, find some customers who would buy your product, and prove there is a market for what you are selling. Once you can prove that consumers want the product and are willing to buy it, then you will be able to make better projections and have a chance at receiving VC.

[Feivi18]

Joshua, thanks for the reply. I'm not totally new at this, and the busines is set up, the plans and concept is ready, the prototype almost so. My market is clear, there is clearly a big potential customer base, potentially millions, but I have seen to much to be complacent and know this SURELY will work. One really never knows if a product will hit it big or not.

I am currently very close to the VC stage. The thing is, putting together all I need for my VC presentations, this inventory thing is the one thing I haven't put together yet.

[jasaunders]

The number that you choose will end up being irrelevant. VC's won't care.
You can say you will make and sell 10,000 or 10,000,000; this won't make or break the deal.

What you do need is a good reason for whatever number you chose.
If possible, research similiar products/technologies and see what their sales volume is and base yours off of this. Whatever you do, just have justification for your number.

[David Rocci]

You should consider a "proof of concept" phase where you order the components for a small number of units and try to sell them in various channels. Also, when considering money that you need for inventory, you don't have to rule out a traditional bank or line of credit.

Once you know how they sell, how to maximize production capabilities, debugging issues, who your customer profiles are... even if it's a rough concept, the proof of concept will help expedite any venture seeking.

-dr

[akula]

yes, joshua is right, none of this matters

seed stage, consumer products with shop inventory don't fit the venture mold

there's nothing you can say in your pitch to correct the fact that you don't fit the criteria for venture financing

take joshua's advise and build your self a real business

snap out of your imaginary fairytale

if you want a second opinion, contact the venture capitalists on my blog roll