Invention Funding With Options For New Inventors
Posted on September 12, 2009 by Jamie Slaughter, with 15223 views
Invention Funding Overview
Invention Funding helps any aspiring inventor to proceed with their invention idea by offering financial support. Many elaborate inventions never fulfil their full potential due to lack of funds or poor financial management. This article discusses the viable options available to an inventor and the routes which can be taken.
Each funding source is completely down to the individual's circumstances, so considering an array of revenue sources and selecting the source which meets your specific demands and situation is the recommended process, in terms of any financial decision.
Who offer support for invention funding?
Many companies exist which concentrate exclusively on innovation. The primary business types are SBIR (Small Business Innovative Research), funding for small businesses via the SBA (Small Business Administration) and venture capitalists. The negative aspect, for any inventor, is that eligibility for such programs is minimal at best. Such companies rarely offer financial backing to individual inventors irrespective of the proposed business model. The descriptions, therefore, of the establishments are somewhat misleading and in the majority of cases present false hope to inventor's looking for monetary assistance.
How difficult is it to be accepted for funding?
The most important factor for many inventions is finance. Without essential support, the idea may be neglected, regardless of how successful it is forecast to be. In order to give you the maximum chance of acquiring such backing, a few necessary steps should be taken. Time should be taken to prepare a solicitation document declaring your intentions and forecast results. This single document is the most important element of an invention financing proposal and can make or break a potential acceptance decision. The document should impress and offer them an incentive to fund the idea. Therefore it is imperative to produce a well written, balanced and subjective proposal which illustrates the prospective impact of your invention.
Familiar requirements at this stage include a management team, one PhD researcher and a precise budget, both present and projected. Following the guidelines set out will prevent an idea being rejected for negligible reasons, and the before mentioned team will ensure that guidelines are strictly adhered to. Acquiring such a team can be impossible for many an inventor, resulting in failure to fabricate an impressive proposal.
Independent inventors struggle to cope with the demands of federal agencies. They often crumble under the statistical analysis and persistent auditing requirements, due to the absence of a management team. Under these circumstances, application to the SBIR is not the most logical of steps. The SBA on the other hand, states, that a small business means "500 employees for most manufacturing and mining industries, 100 employees for all wholesale trade, industries, $6 million for most retail and service industries, $28.5 million for most general & heavy construction industries, $12 million for all special trade contractors, and $0.75 million for most agricultural industries".
These figures may appear large to sole inventors situated at a desk in their own home. The SBA focuses more on medium sized businesses than single inventors; so again, funding support from an SBA is difficult. Loans offered through an SBA rely heavily on both the credit score and credit history of the applicant. If you have been rejected a loan from a bank, then the same result will occur when applying via an SBA, as they are simply operating as a third party on your behalf.
It may therefore be preferred to apply for a bank loan directly omitting the "middle man". Again, a solid proposal must be issued to the bank to be considered and impending interest rates should be monitored and analysed before committing to a loan.
Venture capitalists are not recommended in this industry due to their insidious nature, and constant interference with the running of your business. They will often make reporting compulsory and allow no freedom to explore new methods or techniques. Under this scenario, you may feel restricted and limited as to what you can undertake, therefore limiting your scope for profitability and extensibility.
So what funding method can I actually use?
To run your business the way you want to run it, without feeling like a puppet on a string, the best financial source is yourself. Saving money in order to fund your invention proposals and development can take a long time but in the long run will be more rewarding and offer you a higher degree of freedom. This could mean extending working hours, or even a secondary job in some cases, but all money will be your own and the resulting profits will not have to be declared or distributed amongst others. Budgeting yourself helps to retain financial security and prioritising can assist in depositing the bulk of your finances into the correct areas.
Funding yourself also alleviates the need for needless expenses to third party groups, allowing more money to be dispersed into actual development and a detailed business plan.
There is no better feeling, than bringing your successful idea into the public domain, having funded the entire process alone. There is nothing more rewarding than succeeding, other than succeeding individually.