What should you do if you have an invention idea but no money?
Get your invention idea funded by borrowing money through friends, family, loans, crowdfunding, investors, or grants. Protect your ideas by obtaining intellectual property rights through a patent. You can then license your idea to companies in exchange for a royalty or sell the patent.
Imagine, having an idea and still being able to make money from it. You could get paid by simply patenting your idea and finding the right company to pay for it.
Making money for your invention ideas is possible.
Luckily for you, I’ll show you some of the best places to get funding for your invention. I’ll show you some potential risks that you should be aware of. You’ll be well on your way to getting money for your idea.
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What to do if I have an invention idea but no money?
You can try to raise money for your invention through friends, family, loans, crowdfunding, investors and grants. Patents can be sold or you can submit your invention ideas for royalties. Essentially, you need to raise capital or find someone with money who can carry out your invention.
Friends and Family
Family and friends are the first stop most would-be inventors take for raising capital. Supportive networks will often lend you money interest free, reducing your expenses when compared to traditional financing.
However, you need to consider the impact of your financing choice should your invention idea not work out.
For example, defaulting on a loan or going bankrupt can negatively impact your credit scores and your overall finances.
However, an invention where you borrowed only from family doesn’t work out can negatively impact your family’s finances. Your parents may have borrowed from their 401k or your friends dived deep into their pockets. Not repaying these types of loans can put a strain on your relationships.
Obtain a loan
Banks and private lenders may allow you to take out financing for your invention idea. However, lenders may require you to have a business plan in place so they can evaluate potential risk. As you can expect, you’ll be responsible for paying the loan back with interest.
Crowdfunding is one of the best places to raise capital for your invention idea. You can create a Kickstarter and offer special perks for people to fund your idea. Typically, crowdfunding is a good way to see if your idea will be successful without taking on extra risk.
Creating a crowdfunding project puts your project in front of thousands of people. You can offer perks or incentives for people to fund your project.
An example of a perk would be, ‘Pay $50 and we will send you one of the first prototypes.’
You are essentially taking preorders for your product.
A good product idea will have more demand than you can handle, which is a good problem to have. Bad product ideas won’t get the support of the crowd – so you won’t waste money if there isn’t demand.
Depending on your company structure, you may be able to raise capital for your invention through investors. An investor will give you money to grow your company in exchange for ownership in the company. You can then use this money to grow your company by getting patents, manufacturing or materials, or any other business growth opportunities.
Sell your patent
Some individuals have enough money to obtain a patent, but not carry out the idea to market. Selling your patent will give up your right to the patent. Typically, you receive a good lump sum of money and sell the patent to a company who has the means to bring the product to the market.
Your patent will sell for more money if a company makes an offer on your patent. Companies will typically buy patents between six and seven figures. However, if you approach a company about buying your patent then you may only get five figures.
Obtain a grant
Grants are typically given out by the Federal government, charitable organizations, or other public entities. The sole purpose of grants is to improve the quality of life in certain areas by donating money. Grants are free money, so you don’t need to worry about paying the money back.
For example, your invention may bring clean energy to third-world countries. You might apply for a grant for either clean energy or for supporting third-world countries.
You can find grants to apply for by visiting grants.gov. Use the search function to find and apply for grants.
Submit invention ideas for royalties
You can get royalties for your invention by licensing your invention idea to a company that has the capabilities to produce your invention. The company has the right to manufacture, distribute, and sell your invention idea. You collect a percentage of the profit the licensing company makes in the form of royalties.
Typically, inventors make between 2 and 10% in royalties. Royalties give the inventor an easy way to collect income for their ideas without creating and selling a product. For example, a 5% royalty on $1,000,000 sales would generate you $50,000 in royalties.
Keep in mind, some companies may not want to pay for your ideas and may try to steal them. You should protect yourself by patenting your invention, non disclosure agreements, or seeking legal counsel.
Will companies pay for ideas?
Companies will pay a couple hundred dollars and up to a few thousand dollars for an idea. However, you don’t have any intellectual property rights without patenting your idea. Therefore, your ideas are worth more money if you own intellectual property rights.
Summary: I have an invention idea but no money
As you can see, you need to raise money for your invention idea. You can raise money through family or friends, loans, crowdfunding, investors, or grants. Alternatively, you can sell your patent or license your idea to a company for royalty income.
Companies will pay for ideas, but you need to have intellectual property rights to make significant income. You should protect your ideas by patenting your invention, non-disclosure agreements, or seeking legal councel.
Raising money carries different risks that you need to be aware of. For example, borrowing money from family can put strain on relationships if your idea fails. Alternatively, defaulting on a loan can significantly impact your finances.