When you first innovate a product, it’s hard to visualize your concept. A prototype is a model that looks, feels, and sometimes functions like the real thing. It can help secure funding, score buyers at trade shows, and improve your final product. But sharing a suboptimal prototype early in development can scare investors, and waiting until you’re close to the commercialization stage can hurt your chances of getting nontraditional funding, such as crowdsourcing.
We explored new information from Copenhagen Business School to determine the best times to share prototypes. Decide what’s right for you by learning about the importance of prototype fidelity and the advantages and drawbacks of different approaches.
Why prototype fidelity matters
Creating a prototype can alleviate viability concerns and help you get external funding. But prototype fidelity affects outcomes. Prototype fidelity refers to how closely the model resembles the final product (look, feel, and functionality). Low-fidelity prototypes (proof-of-concept models) are a good starting point during the conception stage. Sketches and diagrams can help you secure a patent, but investors may question the viability and quality of your invention.
A medium-fidelity prototype is functional and can persuade some funders to invest. However, traditional financers (venture capitalists and banks) may find that the risks at this stage outweigh the rewards. Since conventional funders typically focus on the financial return of their investment, having a top-notch model (a high-fidelity prototype) is essential. So, should you wait until the final phases to share your invention? And what if you need funds during the development process?
[Read more: A Guide to Funding Your Business at Every Stage]
The argument for sharing your prototype during development
While there are benefits to sharing your invention at the end stages, many innovators need financing for research and development. Sharing your prototype at the right time can help you get financial and creative support. The American Association for the Advancement of Science (AAAS) reported on new research from Copenhagen Business School, which found that “prototypes may not be universally beneficial for resource acquisition.”
Although “there is consensus that prototypes have a positive effect on venture resource acquisition,” researchers discovered that more isn’t always better. The new study, published in the Journal of Business Venturing, found that both a suboptimal (low-fidelity) prototype and a near-perfect (high-fidelity) model negatively affected funding ability through nontraditional methods. Indeed, “moderate, rather than high, prototype fidelity is more effective in gaining support through online crowdfunding.”
Typically, inventors create a prototype with high fidelity when they’re nearing the commercialization stage, meaning they're almost ready to begin production.
Copenhagen Business School researchers define this as a prototype that “matches the final product in appearance and functionality but is made with different manufacturing materials and methods.” Finding the middle ground (medium-fidelity) resulted in the best results because investors are driven by more than a return on their investment. Crowdfunding investors “are also intrinsically motivated,” meaning they value “supporting the entrepreneurial process above and beyond their monetary contributions through co-creation activities.”
Sharing a prototype during the final stages of development can make funders feel like the inventor doesn’t want to or can’t consider their opinions. As a result, there’s a “decrease in psychological ownership on the part of funders, leading to lower levels of support for the project and consequently less funding.”
Reasons for sharing your prototype in later stages
Typically, inventors create a prototype with high fidelity when they’re nearing the commercialization stage, meaning they're almost ready to begin production. Share a high-fidelity model if you’re bootstrapping during the development stages and don’t need external funding until the last phase. This suggests to investors that you’ve worked out the kinks, meaning less risk. End-stage prototypes are also helpful when pitching your invention or attending trade shows.
[Read more: Manufacturing a Product: How to Create a Prototype Testing Plan]
Considerations for physical versus digital inventions
Since co-creation is important to nontraditional investors, sharing your prototype before nearing commercialization is beneficial. However, this concept is less important if you have a purely digital invention. Copenhagen Business School’s study noted that a digital product is “editable throughout its entire [life cycle]” and “a high-fidelity prototype of a digital product does not necessarily impede co-creation, or only to a limited extent.” In comparison, a physical invention with a fixed design is much harder to change in the final phases, as are those with digital and physical components.
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