Number twelve might surprise you. These twelve ways to get money for your invention ideas are ranked from the easiest and fastest ways to the most difficult and more unlikely.
- Your own bank account.
- Money earned working your regular job.
- Selling your unused personal items.
- Credit Cards.
- Bank Loans.
- Friends and Family.
- Business Partnerships.
- Crowd Funding.
- Pre-sales website.
- Private Investors.
- Venture Capital.
- Licensing Your Idea.
1. Your own bank account.
This is the most obvious and easiest way to get started with your invention idea. It is also the one that people seem to have the hardest time grasping. Pretty much every inventor in history has put all their efforts, including their own money, into their inventions so why should you be different?
If you aren’t willing to finance your invention idea, why would anyone else be willing to invest? This is a very simple concept to grasp yet inventors think that their sweat equity is some how more valuable than people’s cash. The fact is that they have worked just as hard as you for their savings and won’t be willing to give it to you for a pipe dream.
The first step in being an inventor is knowing that the buck stops with you. If you want to see your idea through, you will have to INVEST IN YOURSELF!
2. Money earned working your regular job.
I actually make jokes in my videos about the fact that if you want to finance your invention idea just go get a job and make money. That’s because it’s how I did it for years. I worked full time jobs in the movie industry as an engineer, television producer and more just to finance my dreams of being an inventor. In fact, even after my products started making real money, I worked a full time job for five more years.
This is one of the best ways to get money for your invention ideas. There are big advantages to working a full time job and making money selling your products as a second or even primary income. It doesn’t matter if your products make more for you weekly than working your job. Here are a few reasons that you don’t understand yet because you haven’t been in business.
Reasons to keep your full time job and be an inventor part time.
- The steady income gives you money to invest in your ideas.
- A full time job helps you ride out the slow sales cycles.
- There are many tax savings when your business is the second income.
- Your full time job will probably cover your healthcare expenses.
I don’t want to spend a long time on this section but as you can see there are very good reasons to keep your full time job even if you are making hundreds of thousands per year selling your products. Now I will say that if your revenue gets into to the millions like it did for me, it is probably time to quit that job and run your invention business full time. Keep in mind that things like taxes and health insurance are expensive and a real expense that should concern you in the future. If you are unsure of the sales longevity of your new product, it probably is a good idea to keep that job for a little while longer.
3. Selling your unused personal items.
I recently had a garage sale just to get rid of a bunch of unused junk laying around my house. You would be surprised how much stuff you can accumulate over the years.
Selling your old stuff can raise some quick cash to pay for things like microscopes, voltmeters, tools, proto PCB boards, 3D printed parts and the other things you will need during the prototype stages of your invention. It may not get you to the finish line but at least it will help get you started.
4. Credit Cards.
I use credit cards all the time to purchase inventory, finance product development or just everyday expenses like food at restaurants. Managing your credit properly is just part of everyday life. If you are going to use credit cards as one of the ways to get money for your invention idea, make sure you use your credit wisely. Be sure to keep that credit score in good standing. As you become successful as an inventor you will want to invest in things like real estate and you will need a good credit score for a mortgage.
5. Bank Loans.
My first business was started on a bank loan at the age of twenty. I opened a chain of VCR repair stores on the east cost (not kidding). In order to start these businesses, I needed to raise capital quickly for construction of rented storefronts.
An early customer of mine who became a friend made an offer without me asking. He said he would go to the bank and cosign for the loan if I promised that if things didn’t work out I would go work at McDonald’s and make sure to pay the loan back. Now this loan was only for $5000.00 but that was a huge sum for a twenty year old back in the 1980’s. I made the promise, got the loan, ran the business for seven years and paid back the money.
It’s all about believing in yourself.
6. Friends and Family.
This one is a personal choice you have to make and isn’t always one the best ways to get money for your invention ideas. I come from a family that doesn’t believe in financially supporting grown children in any way. If you are lucky enough to have parents or family members that get excited for your success than by all means use this very special relationship to your advantage. Keep in mind that family and friends can last a lifetime so make sure you don’t put anyone in a position where they can lose more money than they are able to afford.
7. Business Partnerships.
If you have a complicated or expensive invention idea, finding a partner to compliment your skills and wallet is a great way to start out. I have had many partners over the years and most of these relationships have been very productive. Sharing ideas, responsibilities and tasks can really help you launch your invention quickly.
One note about partnerships. Don’t be too quick to take on a partner if you invention idea isn’t all that complicated for you to do alone. It’s best to keep things simple in most cases and just do it yourself if you are able.
Crowdfunding is a very popular and another one of those great ways to get money for your invention ideas. In fact, I have created many successful Kickstarter campaigns over the years.
There are two main crowdfunding websites to choose from. We will be going over these in future blogs. Keep in mind that you will have to build a fully functional, working prototype before launching one of these campaigns. The competition on these websites is fierce and you will need to know how to market over the internet in order to be successful.
Make sure you review these two websites closely. They each have their own way of doing things. If you are inventing an electronic gadget, you will notice that these websites are flooded with “new” products. That’s because they are cheap and easy to manufacture. That doesn’t mean that those products will all be successful even if they get funded. There is a long road to success with your invention as you are discovering.
9. Pre-sales website.
This is a newer trend for people with a large existing online presence. If you have a website like this one with thousands or hundreds of thousands of visitors each month, you may want to go directly to your fans and do a pre-sales launch for your product. Keep in mind that you will have to deliver on your promises. If you have a large social media or internet following you should consider this as one of the ways to get money for your invention ideas.
10. Private Investors.
Private investment is one of the more common ways to launch a business. I have done it many times over the years and so have my friends and business associates. It does mean you will have to give up a significant percentage of the business and profits to your investors but if you don’t have any other way to fund your project than this may be the way to go.
You will have to be realistic and understand that cash has more value than your idea at its early stages. The first people to invest will be getting the largest share of the company. As you grow, if you need more investors, the pie will be split up less. It’s just the way it works and you do run the risk of not only less profits for yourself but also losing operational control of the company. It’s like working a full time job for someone else while still owning the company.
11. Venture Capital
This is a very common way for people to launch not just inventions but also startup companies. It’s not one of my favorite ways to get money for your invention ideas. It is also one of the most ridiculous methods for most inventors to use. I personally know two different people who raised $200,000,000.00 to fund their gadgets. This is not a typo. That’s two hundred million dollars. When each of the founders told me they were going for venture capital, I knew exactly how it would end.
You have to do the math here when it comes to gadgets and understand the product life cycle clearly. If you have a product selling for even a few hundred dollars, it is very unlikely that you will ever be able to keep up with the demands required to make investors of that size happy. The sales growth is unsustainable and in the end the investment will probably be lost. The business will close and you will be left with nothing. That is what happened to both the companies that I knew. Interesting fact: The one company that raised two hundred million dollars had a bluetooth GPS tracking product that was less complicated than Trackstick which I founded for less than one hundred thousand US dollars.
Now I know you are going to say that there are plenty of startups out there with gadgets on the market. Yes, that is true but if you understood the real secret behind venture capital you would know that it is really a game of musical chairs. The first people in usually make all the profits and then sell their shares down the line until the business is no longer viable. A few do fall through the cracks and make it as successful companies but that is less common than you think.
12. Licensing Your Idea.
And I saved the worst way to make money on your invention idea for last. That’s right, this is the biggest lie that you have been told about inventing. As I have said many times here, your idea has no value. Dream all you want and let those invention help companies take advantage of you.
I do have a few regular viewers who have licensed their invention ideas. They are rare cases in that these people are very smart and know how to market their ideas. They also spend time writing patent applications and spend money to do so. In the end, they have explained to me that their licensing deals for toys, tools and similar range from $1000.00 – $10,000 as a one time fee with no royalties. This sum of money may seem great but it usually costs them more in time, effort and actual cash. The reason they are part of my Youtube show is because they want to learn how to really make money as inventors.
Suddenly, licensing your invention idea doesn’t look so good, does it? That’s because it takes real work to turn your invention idea into a success. You can take the lazy way out or you can simply use the money you planned on throwing away and use it to build your invention.
There are many ways to get money for your invention ideas but licensing isn’t one of them in my opinion. Watch this video to learn my real feelings on this subject.