Do you have an idea for an invention but no money to fund it? Unfortunately, this is a problem many aspiring inventors face.
But what exactly is the solution? Should you immediately start raising capital?
Well, not exactly. There are many steps you should take beforehand, such as researching your idea and the market. This alone can take quite some time.
However, once you are prepared to raise capital, you do have many options, from borrowing money from friends or family to crowdfunding.
If you’re not interested in raising capital, you can even sell or license your invention (patent) instead.
This article will cover every step you need to take to bring your idea to life, from start to finish. However, it will focus heavily on what you should do if you don’t have funding.
What You Should Do With an Invention Idea but No Money
You did it; you came up with a brilliant invention that will change the world. However, that’s just the start.
Whether you raise capital, license, or sell your invention, Here are five steps you will need to take to bring your idea to life:
Step 1. Research Your Idea
The first step you should take if you have an idea for an invention is to research it. The primary purpose of researching your idea is to confirm it’s unique and doesn’t already exist.
If you have a great idea, there’s a chance someone else has already thought of it and has an outstanding patent.
One way to figure out if your invention idea is unique is to do a patent search on the United States Patent and Trademark Office’s website. You can find instructions on their website here.
Another option is to do a “prior art search.” A prior art search is another way to see if there are any inventions out there already that are very similar to your idea.
With that said, during this step, you will also want to document your idea. To do so, it’s important that you write down and create a paper trail that includes every detail of your invention.
Write down the date you thought of your idea, its design and functionality, potential names, and anything else you can think of. Each time you make a journal entry, be sure to sign the date.
Not only will this be crucial for getting approved for a patent in the future, but it will also help you fight any potential claims that you stole the idea from someone else or that you simply weren’t the first to think of it.
Step 2. Research the Market
If you’ve determined your invention idea is one of a kind, the next step you should take is to research the market. Your idea may be one of a kind, but is it really needed? How useful will it be?
In other words, will there be product-market fit? Product-market fit is the degree to which a product meets high market demand.
If there’s high market demand, the product will be successful. If there isn’t high market demand, the product may fail.
Determining product-market fit is vital to ensure you don’t waste your time and resources. If there isn’t a high demand for your invention idea, it may not be worth bringing it to market.
To determine the demand for your invention, you should provide surveys to potential customers, conduct focus groups, participate in feedback sharing, etc.
Not only will this help you determine product-market fit, but you’ll also be able to get a clear idea of how much consumers are willing to pay for your invention, how you can make your product better, and so on.
Step 3. Create a Prototype
After determining there is a market for your invention, you should create a prototype. Creating a prototype is all about bringing your idea to life through means of visual representation.
In other words, once you create a prototype, your idea is no longer just a conceptual thought.
You should think of your prototype as a model of what your product’s final appearance and usability will be. This will help investors, manufacturers, and distributors understand the vision you have for your invention.
Furthermore, your prototype will help you identify any changes you need to make to your invention’s feel, appearance, and functionality in order to prefect it.
Keep in mind that having a prototype will be very important when you’re ready to file a patent application. Having a prototype will also help you raise the funds you need to manufacture your product and bring it to the market.
If you need help building your prototype, be sure to use a con-compete and a nondisclosure contract. This will provide you with intellectual property protection for your invention.
Step 4. Apply for a Patent
Now that you have created a prototype, it’s time to apply for a patent through the U.S. Patent and Trademark Office (USPTO) as soon as possible.
Simply put, filing a patent will provide you with legal protection and prevent others from stealing your idea and profiting from it.
Before filing a patent, you should consult a qualified patent professional to review your paperwork.
Note: Most people file two patents: a provisional patent and a utility patent. This is a strategy to increase legal protection.
With that said, here is a basic summary of the 4 primary types of patents:
Utility patents are among the most popular types of patents.
As described by the United States Patent and Trademark Office, utility patents are “Issued for the invention of a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement.”
In simple terms, a utility patent is reserved for brand new machines or processes, opposed to a design patent that caters to the manufacturing and production of new, non-obvious designs.
As previously stated, a design patent caters to the production and manufacturing of new, non-obvious designs.
This simply protects the design of the product, and the patent documentation typically consists of only drawings and pictures of the unique design.
For example, a design patent may protect the unique shape of a company’s soda pop can.
A provisional patent is a patent you can file in the absence of a formal patent claim, oath, declaration, or information disclosure statement.
This allows you to own the rights of your invention without a final product and usually goes hand in hand with a utility patent.
Provisional patents expire 12 months after their original filing date, meaning you must file a non-provisional patent within this timeframe to maintain rights to your invention.
A plant patent is pretty straightforward; it’s a patent for new varieties of plants. However, it does not include sexual and tuber-propagated plants.
In other words, a plant patent is for new varieties of plants that are produced through cuttings or other nonsexual means and do not cover organisms that have been genetically modified.
Step 5. Raise Capital
After creating a prototype, you should begin raising capital to fund your invention and get your business off the ground.
One way to raise capital is to find an investor. For example, you could enlist the help of a venture capitalist.
A venture capitalist is a private equity investor who provides capital to startups or small businesses that demonstrate significant growth potential in exchange for an equity stake.
With that said, here are a few of the most common ways to raise capital to fund your invention:
Family and Friends
Depending on your situation, you may not have to look far to find funding for your invention. Family, friends, and others in your social circle can often be a great way to raise capital.
If you do raise capital from family and friends, be sure to discuss the terms of the investment, such as the percentage of profits they will receive and so on.
You should also consider how funding from your family and friends will negatively impact their finances if your invention idea does not succeed.
This could cause a problem within these relationships that may not be worth it. In this case, you may want to find funding elsewhere.
As previously mentioned, one way to fund your invention is through investors. In fact, it may be your best option.
An investor will provide you with funds to grow your business in exchange for partial ownership of your company. You can then use this money to manufacture and market your invention.
While we previously mentioned venture capitalists, you can also consider the help of an angel investor.
In return for providing you with funding, an angel investor will receive ownership of your company anywhere from 25% and up.
If you’re interested in finding an investor, it’s crucial you’re good at explaining and pitching your product. If you’re not, it will be challenging to get an investor on board. Shark Tank, anyone?
One of the more risky ways to fund your invention is by taking out a business loan. If your invention fails, you will still be responsible for paying it back.
In the event you can’t pay back the loan, you will accrue a large amount of interest and potentially damage your credit. Considering this, you should evaluate your financial situation before doing so.
If you’re interested in taking out a business loan, contact your financial institution to see which types of loans you’re eligible for, depending on your credit score and other factors.
You should also be prepared with a business plan beforehand so they can assess the potential risk.
Simply put, crowdfunding is a way to fund a venture or project by raising money from many people instead of a select few, usually via the internet.
Crowdfunding can be an excellent opportunity to determine if your invention will be a success without taking on a lot of risk.
If you have a good idea, you will get a lot of demand. If you don’t, you won’t get much attention from the ‘crowd.’ If your idea doesn’t get much attention, it may be a sign your invention won’t be successful.
On these platforms, you will present your idea and provide a reason your invention will succeed and is worthy of funding.
The last way to raise capital for your invention on our list is by obtaining a grant. Invention grants are usually provided by the government, charities, and other public entities.
Depending on your invention, you may be able to obtain a grant that funds all or some of your project going forward.
Although you won’t have to repay the grant, it will typically come with guidelines for how the funding must be spent.
If you’re interested in obtaining a grant, a great place to start your search is grants.gov. Simply use the ‘search grants’ option to locate and apply for available grants.
Alternative Step: Sell Your Patent Outright
If you’re not interested in raising capital, one way to still make money from your patent is to sell it outright.
If you sell your patent outright, you’ll be giving up 100% of your rights to the company that buys it in exchange for a lump sum of money.
Giving up your rights to the patent includes everything from future developments to profits and royalties. Once you sell, there is no going back.
Considering this, you should take the time to determine if selling your patent outright is the correct business decision.
If you do decide to sell your patent, you can check out intellectual property auction websites like patentauction.com to see if people are interested in buying your invention.
Alternative Step 2: License Your Patent
Another way to make money from your patent without raising capital is to license it instead of selling it outright.
If you license your patent, you’ll be granting another person or organization the permission to manufacture, market, and sell your invention for a specified period in exchange for a royalty per unit sold or a flat rate.
You can either provide a license to your patent to one party or company exclusively or a non-exclusive license to multiple parties.
Licensing your patent is an excellent option if you don’t want to raise capital but also want to maintain the rights to your invention.
Frequently Asked Questions
Here are a few frequently asked questions related to having an invention idea but no money:
How Do I Get Paid for My Invention Idea?
To make money from your invention idea, you typically have the three options mentioned above: Patent, manufacture, and market your invention yourself, sell your patent outright, or license it.
If you opt for the first option, there will be much more work, but the payout will be greater. If you sell or license your patent instead, it will be less work, but you won’t make as much.
Remember that if you sell your patent outright, you’ll be giving up 100% of the right to your invention idea, and it will no longer be yours.
Can I Sell My Idea Without a Patent?
Yes, you can sell your idea even if you don’t have a patent.
However, if you do decide to sell your idea without one, it’s crucial any prospect enters into a nondisclosure agreement (NDA) beforehand. This will prevent them from stealing your idea.
The only problem is that most companies will refuse to do so. Considering this, it’s best that you at least have a patent application on file before trying to sell your idea.
Can You Get Rich From Inventing?
One of the main reasons people become inventors is the thought of making a lot of money. With that said, most inventors never become multi-millionaires.
However, that doesn’t mean it isn’t possible to get rich from inventing or at least make a comfortable living.
For example, Bobby, Bill, and Judy Edwards, the founders of Squatty Potty, have gone on to make tens of millions of dollars from their invention.
They’re living proof that it is possible. They’re also proof that you can get rich from a relatively basic invention.
Another great example of a basic invention that went on to generate tens of millions of dollars in revenue is the Scrub Daddy, a simple kitchen cleaning product.
Final Thoughts on Having an Invention Idea but No Money
As you can see, not having money is no reason to keep your invention idea to yourself. All you need to do is raise capital to manufacture and bring it to market.
To raise capital, you can look to family and friends, investors, loans, crowdfunding, and even inventor grants. Just keep in mind that different options come with different risks.
For instance, you can damage your finances if you default on a loan. On the other hand, you can ruin relationships if you borrow money from family and friends, but your idea fails.
With that said, If you’re not interested in raising capital, you can license or sell your patent instead.
If you sell your patent, you’ll give up 100% of your rights and ownership in exchange for a lump sum of money. If you license your patent, you’ll receive a royalty for every unit sold.
Now that you know what to do if you have an invention idea but no money, it’s time to get out there and bring your idea to life! While it may be challenging, if you have a great idea, it will be extremely rewarding and well worth it.