If you are a creative individual at heart, you may already have an invention idea or two up your sleeve. However, realizing your invention requires a more entrepreneurial spirit. Even if you never intend to start a business based on your invention, there are still the matters of finding a market for your invention and filing for a patent. Once these preliminaries are complete, you might consider licensing your patent and collecting royalties. Alternately, you may wish to sell your invention idea outright.
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However, before any of these actions can take place, there is usually the matter of locating interested parties who will provide up-front capital for you to build and market your prototype. Where do you find these interested parties? There are actually many different sites and approaches. Listed below are the most common ways in which inventors can obtain funding for their invention idea.
1. Venture capitalists/angel investors
Traditionally, inventors looked for venture capitalists and/or angel investors to pitch their invention ideas and receive funding. This is still the path that many inventors take; however, such funding has its pitfalls. For starters, venture capitalists, or VCs, are typically looking for big-time inventions that can net $100 million in a year. VCs will also “take the reins” of your idea and hire their own business executives, manufacturing company, etc. As a result, you and your invention might be completely written out of the picture.
Angel investors are more of the mind to simply provide you with your requested funds and leave you alone; however, angels are also looking to make a good return on their investment. Thus, angels will want to know if you have a product development team and if the group has any business experience. As a result, securing the typical angel sum of $50K-$2 million is very unlikely- or it might simply be more money than you’ll ever need.
2. Invention “realization” sites
There are online invention sites like Davison Inventing that will build and pitch your prototype for you. In exchange, you are asked to pay for prototype creation and any associated marketing fees. While some of these invention sites may be completely legitimate and helpful to budding inventors, my experience with Davison was not ideal: while the site does have a self-publicized track record of bringing some inventions to the marketplace, there is also a lot of criticism from burned inventors who shelled out $10K+ and never saw anything result from their investments.
Personally, I became suspicious of Davison’s business practices when any invention idea that I pitched to the company was immediately accepted as brilliant and marketable. I also did not hear of any inventor receiving his/her rejected prototype back after spending the money to have it built.
For about three months, I participated in an invention crowdsourcing site called GeniusCrowds. This site solicits invention ideas from an online community in the categories of children’s toys, tools, hobbies, etc. Community members vote for their favorite invention ideas and those ideas with the largest number of votes are supposed to receive special consideration by the participating companies (which are never named). These companies also perform their own evaluations of the invention submissions.
Some community members were in fact selected for “the next step”, but no one was really informed what that step entailed. There was also a lot of community controversy concerning idea theft, since most of the product ideas presented on the platform had not been patented. In the end, I quit GeniusCrowds because I found it to be a waste of my time; furthermore, I preferred to keep my bigger ideas under wraps until I received at least a provisional patent for them.
4. Invention contests
There are quite a large number of invention contests out there with the prizes being rather hefty: for example, Walmart sponsored an invention contest that offered contestants the possibility of having their inventions stocked on Walmart store shelves. Other invention contests include the Rubber Band Contest, Collegiate Inventors Competition, Wood Stove Design Challenge and Proto Labs Cool Idea contest. There are also invention sites, such as Invent Help, that aggregate invention contests.
Sure, contests can be a long shot and require a lot of preparation, but most do offer honest feedback about your invention idea if you are not selected as a winner or finalist. Such critique can be invaluable for your future work. Furthermore, most contests make the utmost effort to protect your intellectual property rights. Of course, winning an invention contest is even better and offers you the opportunity to build your prototype, show off your invention in magazines and/or trade shows, work with a company to commercially develop your product, etc.
Lately, the best resource for budding inventors has been the rise of crowdfunding sites such as Kickstarter an Indiegogo. These sites allow inventors to post their invention ideas along with funding goals (e.g., $5,000) and have the online community “back” those ideas with pledges. In many cases, backers have funded invention prototypes that have then gone on to attract attention from outside manufacturing companies. Backers are usually rewarded for their pledges with the actual invented item; for example, Pebble Technology Company raised over $10 million on Kickstarter by promising to ship a Pebble watch to any backer pledging $99 and above.
While there has been some worry over publicly disclosing invention ideas through crowdfunding sites, these ideas should be reasonably protected from being scooped if they have at least a provisional patent filed with them. Also, the inventor is not obligated to form a partnership with or otherwise hand over control of the invention to his/her backers. Due to these advantages, crowdfunding may be the best and fastest way to fund your invention.