In my previous blog, I gave an overview of the steps that you as a new inventor should take to own, protect and secure your idea or invention. You have probably used your own funds to finance the crucial initial phase. Now that you have hopefully navigated that landscape, your next step is to get said invention into the marketplace. To do so, you need money to fund the different stages of your product’s development.

But before you get to market and sell your invention, you’ll need to raise capital to fund the production, packaging, storage, shipment, and marketing costs for your product, which you can do through a variety of means including acquiring investors, taking out business loans, or applying to governmental and grant programs.

Although you can make a personal investment on your own invention, it’s often difficult to earn enough money to get a product off the ground so it’s imperative that you seek financial help from investors, loans, grants, and through governmental innovation programs. (Mary Bellis, ThoughtCo.com)

While it is crucial to find an investor that is right for you, it is even more important to prepare the perfect ‘pitch’. I would recommend you prepare the traditional pitch but also have the ‘elevator’ variety in your head. After all, you never know who you might run into- elevator or otherwise. Help potential investors understand your product by preparing a short presentation that explains your invention. This effort shows you understand what is necessary to not only raise money, but also what it takes to succeed with a new product.

Include these items in your presentation:

• A statement of what your product is. For example, an improved masking tape for corners, window sills and doors.
• A prototype is best, but a 3D model or a good illustration of your product will also work.
• A short statement of why your product is needed. For example, it’s tough to find good masking tape that works around window and door woodwork.
• A list of the more popular existing products that try to accomplish the same task as your product.
• A market survey to show that your product is preferred by consumers.
• A list of any market contacts you have. These could be industry sales representatives, retail store owners in relevant markets, or key influencers in the marketplace.
• Your patent status, if any. Only include this if you have started the patent process.
• An outline of how you will structure your business, which could be an S Corp, C Corp or LLC.
• An explanation of how you plan to spend the investment.

You will need to update this presentation frequently if you raise money at various times in the invention process. (Don Debalak, One Stop Invention)

Now that you know what you should have prepared ahead of time, let’s take a look at six different avenues for securing funds.

1. Family and friends.
2. Your business network.
3. Angel investors.
4. Government Grants
5. Crowdfunding
6. Partnerships

Family & Friends.

Your first steps, which include the money for models, patents, initial brochures and possible attendance at trade shows, typically comes from people you know. Friends and family will be interested in what you are investing. Tell them about your current investment, and also what you plan to invest in the future.

Your Business Network

Your business network includes people who sell into your target industry, industry sales reps, retailers and potential manufactures of your product. People in your network who like your product are often agreeable to invest because they are in an excellent position to judge whether or not your product will sell. In addition, by investing, they might profit from your ideas, either by selling your product as a rep or retailer, or by manufacturing your product. They can benefit if you are successful, and they typically have funds to invest.

Angel Investors

Angel Investors are people who like to invest in small startups. The best way to reach angel investors is by attending startup conferences or other events sponsored by entrepreneurial organizations. I find the best approach is to do an internet search for “pitching investments” in your state. You will typically find a number of conferences in your area.

Don’t worry about presenting your product if you are not ready. You can still attend the conference and meet angel investors. You also can do an internet search for “angel investors” with your state name. But I have found that many angel investors who look to make an investment in a new invention aren’t in the larger angel investment network. You can also visit angel investor sites like the Angel Investment Network and the Angel Capital Association. Take a look at this article from Entrepreneur for more possibilities. (Don Debalak, One Stop Invention).

Government Funding

In addition, many branches of the government give grants and loans to fund research and the development of inventions; however, these grants are often very specific as to what type of funding is given and what inventions qualify for federal aid. For example, the U.S. Department of Energy offers grants for the development of inventions that benefit the environment or can save energy while the U.S. Department of Small Business offers small business loans to get new companies off the ground. In either case, getting a grant or loan includes a lengthy application process and will require footwork and research.

Venture Capital Funding

Venture capital or VC is funding invested, or available for investment, in an enterprise such as bringing an invention that can be profitable (along with the possibility of loss) to an investor and the marketplace. Traditionally, venture capital is part of the second or third stage of financing for a business startup, which starts with the entrepreneur (inventor) putting their own available funding into a shoestring operation.

Becoming an entrepreneur is quite an undertaking as you’ll need to manufacture, market, advertise and distribute your own invention or intellectual property. During the initial stage of financing, you’ll need to draft a business plan and invest your own capital into the product, then pitch your idea to the venture capitalists or angel investors who might want to invest.

An angel investor or venture capitalist may be convinced to contribute funding. Generally, an angel investor is someone with spare funds that have some personal (family) or industry-related interest. Angel investors are sometimes said to invest emotional money, while venture capitalists are said to invest logical money—both are willing to help give the new enterprise a more solid footing.

Once you secure financing, you will likely have to report back to these investors throughout the fiscal quarter and year to update your backers on how well their investment is doing. Although most small businesses are expected to lose money in the first one to five years, you’ll want to remain professional and realistic about your earnings projections to keep your investors happy.

Partnerships

Partnerships is another great way to fund your business. There could be individuals in your sphere – business, personal – that is open to establishing a formal partnership for a percentage of the proceeds. You must be careful however, to make sure that the percentage of the profit is commensurate with the level of investment. You should also include the steps of an exit strategy, should one become necessary. Contact an attorney for direction and to ensure you have all the bases covered.

Securing the funding you need is a daunting, difficult, challenging but achievable endeavor. Entrepreneurs do it everyday; its requires discipline, devotion and focus to persevere. You must have the mindset that failure is not an option. This is of course if you are confident your invention is worth the time, money and effort. You will encounter roadblocks, you will be told no. For an inventor, that is the norm. Carry on; even if it takes years.

As an entrepreneur, I always have a picture in my mind of my product in all its colorful glory on a shelf, on display. I recommend that you perceive your success everyday. Breathe it into the universe. I know it is difficult especially in these challenging times. Try setting aside ten minutes in your day, everyday, when your invention is your singular focus. In that moment let it fly and stay positive.

Salomie Chung

Inspiring Infinite Possibilities.