Alright, so you’re looking to acquire funding for your invention. Here are a couple of ways to get the capital to fund your product. The first way is to find a group or a private investor willing to invest in your invention. The Second way is to apply for loans or grants; you can usually get these from certain government agencies or private organizations. Finally, you can self-fund your invention using your savings or take a loan from the bank.
This article aims to break down all the options and dive deeper into their advantages and disadvantages.
To acquire private investment, you must first find a willing investor; you can do this by searching online investor directories or networking at trade shows and conventions. Using linked-in, you can sometimes find venture capitalists, angel investors, or companies who might be interested in funding your invention.
Keep in mind that any investor requires some recompensation for their investment. This recompensation can come in many forms, but the most common are percentages of sales or an interest rate on a loan.
If you believe getting a government loan is the right choice for you, you can begin by finding grant programs online. Another option is to contact your local Small Business Administration (SBA) office to see if they offer financing programs for inventors. Finally, the last option is to apply for a state or local government loan.
There are also a couple of non-government organizations that might provide funding for your invention. These include the National Science Foundation, the National Institute of Health, and the Small Business Innovation Research program.
You can use any savings you have, or you can apply for a loan from your bank. Remember that you must have an excellent credit score to apply for larger loans. Additionally, businesses can apply for larger loans than if you applied for a personal loan.
Some people open up LLCs, begin a business, build up their business credit, and then apply for a sizable loan. This method can be a great way to achieve funding for your invention, especially if your invention has to do with your business.
Another great way to self-fund is to create an invention portfolio using a prototype and start gathering investment through online platforms such as Kickstarter.
Why should I fund my invention?
Funding your invention isn’t for everybody, but here are some reasons you might want to seek funding.
- You want to retain complete control over your invention
- There’s a potential for a higher Return On Investment (ROI)
- You want the satisfaction that comes with bringing your own invention to life.
The Risks Of Funding Your Own Invention
Just Like there are benefits of funding your own invention, there are risks. Please weigh the risks and benefits first Inventing.
- You run the risk that your invention will not be successful.
- If this happens, there’s a possibility you won’t be able to recoup your initial investment.
- You could end up in debt
Is my invention worth funding?
So this one is hard to answer because every invention is vastly different.
However, there are a few key things to look at while deciding whether you should invest in your invention or not.
- What is the estimated cost of developing, manufacturing, and marketing your product? And will you be able to afford it in the long run?
- Do the proper market research before investing a penny into your invention.
- This includes seeing how scalable a product is, the target market size, the product demand, and much more that will help you understand if your product is worth investing in.
- If you’ve already tried licensing and can’t seem to find success, take a second look at your product. What can you change about it to make it more desirable, or is it worth it to keep pursuing this invention?
- Have professionals do an in-depth product analysis. The truth is that not only as inventors but as people, its almost impossible to objectively look at our own ideas. This is why outside feedback is always more truthful and beneficial, especially when professionals give you their undoctored opinion.
What are the other options for my invention if I can’t fund it?
Earlier in the article, we mentioned licensing. Licensing is when you partner with a more prominent company and lease your invention to them, and in return, you get a percentage of the product sales. You can also flat-out sell your invention to them or, in rare cases, partner with them and become an employee of their company, helping them manage your product.
Benefits Of Licensing
This is a path that inventors most often look to take. There are many reasons why.
- Generating passive income through ongoing royalties.
- You won’t have to bear the total cost of bringing your invention to market.
Downsides Of Licensing
- You have no control over how your idea is marketed.
- If your idea is highly successful, you only get a fraction of the profit.
- Pulling out of licensing deals to then market your idea on your own can be a legal nightmare.
In the end, no matter which path you choose to take to acquire funding, it’s crucial that you do extensive research and understand the invention industry before diving in. Getting funding for your invention can be difficult, but inventors who are well prepared and have a great business plan are far more likely to secure the financing of their invention.
Bonus Tip: Having a proper invention portfolio, solid business plan, and a working prototype dramatically increases your chance of success in funding your invention.