Do you have an invention, but can't afford the development costs to bring it to market? This post will walk you through how to pay for an invention with no money.
Don't give up – there are many options out there if you're serious about bringing your product to market.
There are many ways to pay for an invention with no money. It can be as simple as borrowing funds from family and friends, or as complex as forming a corporation funded by a consortium of venture capitalist.
Let's walk through some of the options.
Borrowing from Friends & Family
When done right, borrowing from people you know can help you bring your invention to market. Asking for money from friends and family an invention takes careful planning. You are not guaranteed a loan just because you have relationships with people.
Avoid financial troubles and damaged relationships by doing the following:
- Calculate how much money you need
- Plan how to make your pitch
- Explain the risks to friends & family before accepting money
Crowdfunding is the act of funding a project or invention by raising small amounts of money from a large number of people via the Internet. Some popular crowdfunding platforms include Kickstarter, GoFundMe, and Indiegogo.
By using social media to spread awareness, people can reach more potential donors than traditional forms of fundraising.
Successful crowdfunding projects include:
- The Coolest – The inventor of The Coolest raised over $13M on Kickstarter for his cooler invention. This ended up to be one of the biggest disasters in Kickstarter history after the fact, but still can be noted as a successful attempt at crowdfunding.
- Pebble Time Smartwatch – This project raised over $20M, and the company was acquired by Fitbit in late 2016.
- Sondors Electric Bike – Marketing itself as the world's most affordable, versatile electric bike, Sondors raised over $6M. They now carry six premium electric bike models.
If you're prime-time ready, consider pitching your idea to the TV show Shark Tank.
What is Shark Tank?
“The Sharks – tough, self-made, multi-millionaire and billionaire tycoons – continue their search to invest in the best businesses and products that America has to offer. The Sharks will once again give people from all walks of life the chance to chase the American dream and potentially secure business deals that could make them millionaires.”
There are three ways to get featured on Shark Tank:
- Submit an application
- Attend an Open Call
- Accept an Invitation to Audition
Before you dive into the shark tank, its important to know that its a long and arduous process. Most individuals and groups who apply do not make it onto the show; however, don't let that stop you from finding out more about the process if it piques your interest.
There are many grants out there for inventors with no money.
Sources of grant funds include
- Non profit Organizations
Governments give money to qualified inventors to encourage innovation, as it helps drive the economy forward. The United States, the United Kingdom, and many other countries offer grants to inventors.
Universities and colleges often support innovative new developments through idea incubators and competitions for invention grants.
Nonprofit organizations might offer invention grants to help promote inventions in their industry, including technology, healthcare, and projects with a social benefit.
A small number of foundations provide program-related investments (PRIs) to social enterprises and nonprofits. PRIs are low-interest loans that a foundation can give to inventions or projects that align with the funder's interests.
A final option is to seek a nonprofit that will act as your fiscal sponsor. Fiscal sponsorship is a formal arrangement in which a 501(c)(3) public charity sponsors a project that may lack exempt status. This would allow you to seek grants and solicit tax-deductible donations under your sponsor's exempt status.
In many cases the nature of an invention is relevant to the advancement of a specific area, or agenda. Think about how your invention is helping to make the world greener, promoting the safety of children, or meeting other social needs.
Angel investment is a form of equity financing where the investor supplies funding in exchange for an equity position in the company. They are typically high net worth individuals who have extra cash and want to invest it to receive a higher return than other forms of investing.
Lending from angel investors is less risky than bank loans or other forms of financing because angel investors don't expect to be paid back if the business fails. They often have a good understanding of business and have a long-term view.
A downside to using an angel investor is you will lose some control over how the business develops.
To obtain funding from angel investors, you will need a detailed business plan.
Click here for a list of angel investors focused on inventions.
Venture capitalism is a form of equity financing provided to start-ups, early-stage, and emerging companies that require funding to progress. They typically target big projects that require sales projections in the $50M to $250M as a starting point. This isn't a likely option for most inventions, but could be an option for big ideas.
In a venture capital deal, ownership pieces of a company are created and sold to investors through separate entities created by venture capital firms.
Save Up and Fund it Yourself
If you aren't in a big hurry, have a solid source of income, and development costs are reasonably low, you may be able to save up and pay to develop your invention yourself. This method will give you total control over the process from start to finish.
For tips on saving money, read about 5 hacks to creating a budget that works.
Regardless of which method you choose, don't give up! If you believe your invention will fill a need in the marketplace, and your design is unique and functional, keep pursuing ways to fund development.
Now that you have some ideas on how to pay for an invention with no money, let me know what your biggest issues are with obtaining funding.