Ah, the age-old question of how to make money when you don’t have any. Fear not, because no matter how successful you are as an inventor, you will always be asking yourself: how do I get money to build my invention?
The fastest and easiest way to get money to build your invention is by making the upfront costs low enough so that you can afford to build it on your own. It basically depends on the complexity of the invention or product. It also depends on how detailed you need to make the completed prototype in order to prepare for manufacturing. Hopefully, you will also need to make the first one hundred pieces of the product to sell.
Because your options are more limited when you are on a tight budget, you will simply have to be frugal and creative with your decisions. Maybe instead of metal parts, in the beginning, you use 3D printed parts for the prototype. Replace the fancy and expensive color decals with a single colored label or even just laser engrave the parts. It all depends on what you are building and the size of your budget.
It will cost you money to build your invention.
This is the usual Invention Therapy reality check. Unfortunately, you won’t get around the fact that you will need to spend some of your own money to build your invention. If you are going to seek investors, it is very likely that you will need a just about ready to manufacture, fully functional prototype. Very rarely, do invention ideas get funded without some sort of track record or at least a really good proof of concept like a ready to go prototype.
Invention Therapy wants to teach you how to invest in yourself. We aren’t big on outside investors because along with money, no matter how big or small the investment, comes huge responsibilities and lots of potential unforeseen problems. If you are patient and smart, you should be able to do everything on your own and keep complete ownership of your invention.
If you can’t finance the invention or product on your own.
You will need to look for outside investors or money. These are the usual places people go when trying to start a business:
- Savings Accounts.
- Kids Education Funds.
- Retirement Funds.
- Bank loans.
- Credit cards.
- House refinance.
- Friends and Family.
- Partnerships.
- Angel Capital.
- Venture Capital.
- Private Equity.
- Crowd Funding.
- Grants.
- and many more!
If this list scares you, it really should. There are no guarantees that your product or invention idea will be successful no matter how sure you are. Nothing ever goes the way we plan in life so we need to be smart about our financial decisions when it comes to launching our products. I explain all about investment money detailed in the video below.
Investors aren’t interested in the product or invention.
Ok, well the product is important but what is more important to an investor is if you will be able to live up to your promises. After all, they will be giving you money and expect it returned with a profit.
You really are trying to sell yourself to investors. and not so much the invention or product idea. If this is what you want to do and have the necessary skills as a salesman to close these kind of financial deals then by all means go for it. Just remember that if you are that good at raising capital then you are probably going to be good at selling your products to the retail market and over the internet. If that is the case, you could regret the decision of taking on outside investors for the rest of your life which is exactly what happened to me.
Taking money from an investor was one of the biggest mistakes of my life!
This website is based on my personal experiences in life and as an inventor so I want to make sure I share with you guys as much as I can regarding my experiences over the years.
It would be easy for me to write this blog as if everything I did in life was perfect and only had the best outcomes. Well, at least for me, that would not be true. I have had many successes over the years but I also have had many mistakes and regrets. As I said above, taking on one particular investor was one of my biggest and most costly mistakes.
Keep something in mind when you are planning your new invention and business venture. Always plan for things that can go wrong but equally prepare for when everything goes the right way. Trackstick was not my first invention but to this day is one that will forever define who I am.
Tracksitck was released as a product in 2005. It took me about a year to develop the GPS tracking and mapping technology which, for the time, was very advanced. In fact, it was the first product to be released to work directly with Google Earth and influenced both the Apple and Google mapping systems used on your smartphones. In the early days of Google and Trackstick, technology was much different than that of today. I am proud to say that I was an influencer long before that became a thing.
Over the course of the first year of design, writing software, prototyping and building what I thought was a completed injection molded case, I spent countless hours and over seventy-five thousand dollars for development of this GPS data logger. Much of this money was wasted on an unusable plastic enclosure built by someone I thought had experience in this type of design. Unfortunately, what he lacked in mold making experience, I lacked in experience as a product designer and inventor.
Keep in mind that when I invented this product, the internet was in its early days and not all the technical information needed for the electronics design was available by doing a Google search. Back then, I had to spend hours flipping through catalogs and spec sheets.
Once I worked out the design issues and duct-taped together the first one hundred “demo” units, we took them to trade shows and started looking for resellers. Much to my surprise and through the help of my wife who happened to be a great salesperson working in the GPS tracking industry, we sold all one hundred demo units within a few weeks.
So when you ask me how do I get money to build my invention? I will tell you that you do it by self-funding it any way you can because the lesson is coming below.
Safe ways to self-fund your invention idea.
- Put money aside from your job each week.
- Work with someone from the beginning as equal partners in skills, money and time.
- Lower your initial startup costs as much as you can.
- Make the stripped down version of your product and test the market first.
- Make most of your mistakes in software before building the prototype(s).
Back to my sad invention story.
So we were able to sell one hundred demo units at $200.00 each which was great but we still only had $20,000.00 to build our second injection mold at a cost of $35,000.00 plus the potential to sell one thousand pieces the minute the product was ready for release. Imagine what I was feeling like at that moment as an inventor. To make this long story short what happened was completely my own doing and why it was my biggest life mistake.
I had depleted my personal savings and we had kids going to college so there was no more money available no matter how good the investment might have been at the time. With a minimum, not guaranteed, potential orders of one thousand units or $180,000.00 our first month, I went to a “friend” with money and asked him if he wanted to invest $75,000.00 so we could launch the product quickly. He said YES, signed a simple contract and deposited the money into my company account. The rest is history or so the story goes. We built the product and it went on to make tens of millions of dollars.
We sold almost two thousand units in our first forty-five days, our investor got his money back within ninety days and went on to make $200,000.00 his first year from his $75,000.00 investment. Now that would be fine if it wasn’t for the fact that so much money was coming in that some people just can’t handle the stress (I am being nice here).
My investor was also working as the financial controller for the company and got addicted to drugs during his time with the company. Now, I grew up on the east coast so not many things in life bother me but drugs are generally a problem for me. I stay completely away from them as a rule in life. This drug addiction was so bad that it nearly destroyed our multi-million dollar company.
Many lawyers and hundreds of thousands of dollars later and I was able to wrestle control of the company away from him and back into my own hands.
Failure can bring out the bad in people but success can reveal worse things that you never would have imagined.
Finance the building of your invention on your own when you can!
I hope this post helps you make the right decisions when trying to decide how to fund your invention idea.
Are you ready to become an inventor?
Getting your idea out of your head and into your hands is only the first in a long set of steps towards becoming a successful inventor.
First Steps To A Successful Invention
At Invention Therapy, we believe that the power of the internet makes it easier than you think to turn your invention idea into a reality. In most cases, you can build a prototype and start manufacturing a product on your own. Changing your way of thinking can be difficult. Being an inventor requires you to balance your passion with the reality of having to sell your products for a profit. After all, if we can't make a profit, we won't be able to keep the lights on and continue to invent more amazing things!
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