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Have a consumer model that is proven. Keep manufacturing expenses low. Have a well-rounded team (finance, marketing, legal, etc.). And by all means, create a pitch that captures investors.
Those are some of the tips investor Kevin Harrington, original panelist on ABC’s “Shark Tank” and founder of the “As Seen on TV” product line,” offered to Auburn University student entrepreneurs immediately after the Tiger Cage competition finals on April 22. In a closed session at The Hotel at Auburn University and Dixon Conference Center that also featured a pair of 2015 Tiger Cage finalists, Simply Prose and Parking Grid Technologies, and 2015 Tiger Cage competitor Tennibot, Harrington offered a variety of strategies that young start-ups should employ.
“I’ve raised tens of millions in deals based on a good pitch,” said Harrington, who evaluated student pitches as a Tiger Cage judge for the second consecutive year. “In creating pitches, I offer three steps: tease, please, seize. Show me an attention-getting problem. Then offer a product that can solve that problem in a unique fashion.”
This year’s Tiger Cage winner, Envelope Aerospace (engineering students Shawn Majzlik and Troy Ferguson, and political science student Dennis French), created a device that could dramatically cut weather balloon costs for the National Weather Service while potentially improving forecasts. Parking Grid Technologies (mechanical engineering students Jonathan Philip and Alex Wakefield), winners of the inaugural Tiger Cage, created an app that showed available parking spaces for commuters. Both showed solutions to industry problems.
But Harrington, who has launched more than 500 products that have generated more than $5 billion in worldwide sales, stressed that potentially good products must also be backed by sound numbers.
“It comes down to numbers,” he said. “You have to show projections based on market analysis. I come up with projections based on proof of concept, which is easier to raise money because it’s real. How you take your product from ‘potential’ to ‘reality’ is the biggest thing I look for. You will never get the same amount of money if it’s in the development stage as you would if you were in the sales mode.”
Some products are geared for retail sales. Others can be pitched directly to existing companies. One Tiger Cage finalist, HillVoy Solutions (finance student Zach LaVoy, computer science student Eric Jackson, and information systems management student Bobby Hillman), pitched software designed for employees to discretely file work-related complaints. Harrington explained how to navigate potential pitfalls along the way.
“There’s a concern here that you could make a great presentation to a company who says, ‘that’s a great idea,’” Harrington said, “then you walk away and they say, ‘let’s do this ourselves.’ You’ve got to have something unique about how your product works. Figure out how you can stop the company’s CEO from taking your own product. Tie up the intellectual property. Maybe give the company a free trial. Get them hooked.”
Speaking of getting them hooked, Harrington is among investors supporting what he said was “the world’s first electric fishing lure.” Another tool used to lure investors, he said, can be earned media coverage of a product and testimonials. Harrington said that Field & Stream Magazine will soon publish an article about the lure.
“This will give you third-party credibility,” he added. “Use your customers as much as you can and this will show marketability, finance potential and retail validation.”