As I coach inventors, and listen to their problems and frustrations, I hear the same theme again and again: "I donít have any money. Certainly there must be people who are willing to finance my great idea, arenít there?"
The answer is yes. But sadly, most independent inventors never find the people who would review their invention or great idea, and maybe provide enough money to develop it and protect it so that it is marketable (licensed for royalties, or sold outright). The irony of all of this is that there is more money available for truly great ideas today than ever before. Corporations are regularly downsizing, and many men and women find themselves either looking for a job, or looking for a business to go into. In such times the job market is not only highly competitive, but the younger men and women — especially those who have recently graduated from college — are willing to work for less money than their seasoned counterparts. This significantly increases the pool of older workers who canít find a job, and are considering starting their own business.
Many of these seasoned workers have been "downsized" by way of compensated early retirement, also known as a buyout. Many have cash or stock that can be converted to cash. And many have always wanted to get into their own business. (One author says that instead of an up-to-date resume in their top desk drawer, executives nowadays have a business plan.) Further, the present-day general suspicion of the corporation, brought on by the likes of a certain infamous corporation and its "creative" accounting practices, has dampened the dreams of many an otherwise compliant executive. Restoring the glamorous image of large corporations may take decades. Meanwhile, senior executives are contemplating their next move. Those in their fifties often have paid off their mortgage, put their kids through school, and have acquired most of the high-tech "toys" that give them comfort. What they need now is a fulfilling sense of purpose — something more than television or fishing or gardening — to challenge their time and years of experience. They have the money and the business acumen, and you have the potential product. Here are the makings of a win-win situation that may be the basis for obtaining the money you need to launch your invention or great idea.
Still other sources of private finance for inventions, known as angels, are all around and looking for the right investment.
The problem of how to get financial sponsorship for your invention or great idea really breaks down into two main smaller problems:
- How to locate prospects who are willing to at least look at your invention, and consider its potential as a product that can be licensed or used to start a business.
- How to create a proposal that fits the objectives of the person who has the money you need.
How and where you will get the money to finance your invention depends largely on your answers to two questions. The questions derive from essential and practical issues, and I will refer to these issues throughout this book.
- Is your goal to license (or sell) the rights to your invention, or is it to start a business, and produce your invention?
- To what degree are you are entrepreneurial?
If you are a typical inventor you will probably want to license your patent, and collect royalties, or even sell it outright. If you are more the entrepreneurial type, you may wish to start a small business to produce your invention and market it. In either case, your success in profiting from your invention depends largely on the degree to which you are enterprising and sufficiently disciplined to carry out the necessary tasks.
The most enterprising person will want to start and run his own business. The least enterprising person will most likely be satisfied with less financial rewards from his invention, and want more time to go on creating or inventing. True idea creators and inventors typically lack the burning ambition of the more business-oriented person. (I donít mean this in a negative sense. We are what we are, and evolution has produced many human traits that serve our species well. It is because we have a low tolerance for routine work that we find better ways, and invent better devices to make our lives easier, and even safer and more fun.)
The point is that we donít all aim to create a thriving company, and spend our lives managing it. Many of us are content to create or invent, and hope to turn over to someone else the more routine aspects of converting our "babies" into products or services.
In dealing with hundreds of inventors over many years, being an inventor myself, and having two close friends who are extraordinary inventors (geniuses, in my opinion), I have come to know the extremes of the inventor personality very well. We can think of the creative personality as covering a gamut from pure inventor at one end to pure entrepreneur at the other end. Most of us lie somewhere in this gamut other than at either extreme. I donít say this to comfort you if you are inclined to be lazy, nor to flatter you if you are a truly enterprising person. But wherever you fit on the gamut line, you must be entirely honest with yourself about it or you will likely not earn much money from your invention.
Because this concept is essential to your success, and to your access to money for financing your invention, I will emphasize it here graphically:
Keep in mind that we are placing a creative personality (you) on this gamut. The pure inventor (or artist, author, etc.), a "5" at the left end of the range above, creates mainly for the pleasure of creating. He or she derives most of his or her satisfaction from the praise and acknowledgment of others. If money accompanies the praise and acknowledgment, thatís fine, but itís not the main objective. If you have ever received a patent you will have also received a solicitation in the mail to purchase a fancy plaque replica of your patent. Many inventors purchase these plaques and display them in their homes. The fact that the patent plaque market is thriving suggests that the psychic rewards of inventing are very real and satisfying to many inventors.
At the far right end of the gamut is the pure entrepreneur. This person is also creative, but his or her invention may not be tangible; its novelty is often found in how the product is used, or how it is produced or taken to the market, or even in how he or she locates the innovation of another person, and acquires it. (This is not always the case, of course. Some entrepreneurs invent a tangible product, and form a business around it. And they may never invent a second product, or need to.) However, a number "5" entrepreneur would never be found owning a fast-food franchise unless he or she invented a better way to service customers, and created his or her own company. The McDonaldís chain was invented by the McDonald brothers as a more efficient way to produce hamburgers and serve them as against customized food-order preparation, and the waitress (or carhop) method of delivering it, which was the popular mode at that time. McDonald brothers were true entrepreneurs because of their innovations. You canít really call yourself a true entrepreneur unless your product or service involves innovation. (There is generally little or nothing truly entrepreneurial about running a gas station or a Seven-Eleven, for example.)
Peter Drucker, Americaís foremost sage of business, wrote in the preface to Chapter 1 of his book, Innovation and Entrepreneurship: "Innovation is the specific tool of entrepreneurship, the means by which they exploit change as an opportunity for a different business or different service."
Iím sure you get the point. Figure out where you lie on the 5 to 0 to 5 line, and keep it in mind as you read the rest of this book. This is not a trivial concept. Your success in gaining finance depends to no small extent on your intellectual honesty in placing yourself on that line. But, not entirely. Youíve got to be enterprising in any case. I donít mean that you will have to turn into a drudge. But the old quote attributed to Ralph Waldo Emerson about the public beating a path to your door if you invent the better mousetrap is utter nonsense. Emerson was a great philosopher, but as far as we know he never invented anything that made it to the market. You, alone, must beat the path — the path between you and the money you need, that is.
I frequently receive calls from would-be inventors who have a great idea — one that they believe will make them and their supporters a fortune. These inventors honestly believe that the traditional sources of money should be willing to finance their great idea on the strength of its promise alone — even seek them out. Folks, it just doesnít happen that way. Ideas are abundant. A highly creative person will have a couple of good ones before he or she finishes breakfast. And because ideas are all around us in abundance, the practical people who have made enough money to finance them are not likely to gravitate to yours . . . unless you take certain steps to develop it and demonstrate why your idea is not just another "me too," but has the potential to generate extraordinary profit.
Before we get into the means of getting money to exploit your great idea or invention, I should emphasize the difference between the two: Just as a plot is not a novel, an idea for an invention is not an invention. Until you can communicate the details of how your idea works by showing it in sketches and written specifications and instructions, all you have is a great idea. And ideas, adjusted for inflation, are a dollar a dozen nowadays. Even if you have worked out all of the details, and can show on paper how your invention works, this is barely an adequate way of explaining or demonstrating it. A prototype or working model of your invention is a much more effective way to evoke enthusiastic response, and enlist support. Iíll tell you a lot more about converting great ideas into tangible inventions as we go along.
I must also add that you may find the path to successful inventing discouraging at times. Not every invention story has a happy ending. I say this based on my years of experience, observation, teaching, and writing in this field. In general, I am an optimist, and I consider myself successful as an inventor with many patents. But I will tell you the truth about what works and what doesnít. In the end, I think that you will feel good about what I have told you — encouraged to go on and create. And hopefully you will find support, both moral and financial, and even make money if that is your objective.
Summary of key points:
- There is more money available today for financing inventions and great ideas than ever before.
- Downsizing and the general tarnish on the corporate image have freed up many executives who are thinking of going into their own business. These people often have the money it takes to fund an invention or a great idea, but may not be sufficiently creative to come up with a great idea or invention.
- Even creative executives cannot "invent on command." As an inventor or idea person, you probably agree that the truly great invention comes along infrequently, and usually at random, not when you are struggling to create.
- If you have an exceptional invention or great idea, somewhere there is an out-of-work person who needs it.
- Private investors, known as angels, also are seeking (or at least receptive to) innovative potential products in which they may invest.
- Before starting your quest for finance you must have a clear idea of whether you wish to license your invention or start a business, and produce it.
- Your success depends to no small degree on knowing where you best fit on the line that ranges from pure innovator to pure entrepreneur.
- Ideas are a dollar a dozen. To gain finance you must develop your idea, and demonstrate that it is not merely a "me too," but has potential for extraordinary profit.
- No one — neither investor nor customer — will beat a path to your door. You must do the beating. This book will show you how to "beat" with a baton rather than a baseball bat, and hopefully make your journey pleasant and rewarding.
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