If you thought a cot was just another piece of furniture, think again. Four Coventry University graduates have designed an intelligent cot with the potential to connect to modern home network systems so that parents can monitor the air temperature and remotely rock their baby. What's more, they will be able to see and hear their child from any room in the home, while a platform will be provided that raises the mattress to make it easy to lift their baby out.
There's only one problem. The graduates want to get their "Intellicot" on to the market this year, and to do so they need funding. Should they start by asking for a large investment, aiming at high production levels, or begin with low-volume production, where the tools will be cheaper, and pitch their idea to investors for a lower amount?
"The latter would be the safer option," says Adam Treen, one of the graduates. "But the risk is that if volumes increase dramatically, we may need to change the manufacturing process to cope with demand. That would entail a large capital expenditure - perhaps even doubling the cost of tools."
Meanwhile, asking for a large investment carries the risk that the graduates would be left exposed if the idea did not take off. The benefit of this option, however, would be a reduction in the cost of the product to the user.
The Intellicot came out of a project that began 15 months ago, when the four graduates were studying for masters degrees in industrial product design. "We were sponsored by an engineering design consultancy called Technik2, which gave us a brief focusing on the automated home," says Mr Treen. "We looked at the various rooms around the house and realised nursery furniture hadn't changed much. So we researched parents' needs, as well as healthcare needs, and put together the concept of the intelligent cot."
When the four left university, they each invested some of their own money in the concept, enabling them to pay for an office at the Coventry University Business Park, as well as to develop the idea and build a full-scale prototype. Their next step will be to apply for a grant from the Enterprise Fellowship Scheme for up to £7,000.
In terms of practical help, they are receiving support from Coventry University's business start-up programme, Vision Works. Meanwhile, the Connect programme at Warwick University provides them with a business mentor.
"All this is incredibly helpful and helped us become a limited company at the end of last year. But we still need to fund the product," says Mr Treen.
The Intellicot was originally aimed at the domestic market, with an estimated price tag of £1,000, and retailers have shown an interest. "But we had a research report done by the University of Central England, which suggested we aim at neonatal units in hospitals instead."
WHAT THE EXPERTS SAY
Rupert Merson, Partner, BDO Stoy Hayward
"To market the product, they need another team member. They should recruit someone who knows how to build a business, and in particular someone with enthusiasm for the Intellicot.
"Inventors and entrepreneurs are different. Inventors do mysterious things in garden sheds. Entrepreneurs get things out of sheds and into markets. They're not necessarily creative types but they know how to convert inspiration into cash.
"The entrepreneurial individual would start with a proper business plan. The founders' uncertainty about how much funding to ask for suggests this hasn't happened. A plan would demonstrate the strength of the opportunity to a potential investor, and how Intellicot plans to exploit it. The funding required is the number that pops out at the bottom.
"Investors don't put their money into products or technology, they put it into management teams and plans."
Stephen Pegge, Head of Communications, LloydsTSB Business
"When financing a business rather than just a project or specific asset, it is always important to think beyond the immediate need to possible future requirements, and the graduates are already wise to this.
" 'Risk' or 'seed' capital is what is needed here, and business angels are the most obvious source - preferably ones with deep pockets and a long-term interest in the project.
"Just because you've got the cash, though, it is not a good idea to go from prototype to full production without test marketing.
"A good source of contacts is the British Business Angels Association at www.bbaa.org.uk."
Stewart Masterton, Business Adviser, Business Link for London
"During the pre-launch and launch stages, the business plan should be conservative and carefully targeted at defined market sectors. This allows manufacturing problems to be identified and early users to provide feedback on reliability as well as ideas on future development that you may wish to incorporate at minimum risk.
"The largest outlay will be on manufacturing tools. Rather than buying them, it is worth investigating leasing and hire purchase, as these forms of financing allow businesses to use an asset for a fixed period. This way, fixed payment costs can be built into the business plan, with an option to buy the equipment outright at the end of the contract.
"For the rest of the funding, private investors and business angels are more willing than venture capital firms to invest in smaller firms. 'Angels' also get involved at a much earlier stage."Reuse content