This Project is about improving the resources available to help you exploit your idea. That means looking for people as well as money.
You may need extra people because exploiting an invention involves a range of skills that few individuals possess. If you’ve worked alone up to now, it may help to form a team to share the risk, share the workload, generally raise your game and get results more quickly.
You may also need external investment or support because exploiting an invention can quickly become dangerously expensive. Funding specifically for inventions is extremely sparse, but where there’s a will there’s usually a way. We point you in the direction of some of them.
If you’ve been working on your own up to now, that may have to change.
In the early stages of invention it’s the norm for inventors to work alone, when doing things cheaply matters more than doing them quickly. You may indeed be able to work alone indefinitely (and skip this Project) if your idea is easy to manage and finance from your own resources. But few inventors are so lucky. If you reach a point where you can’t go any further without someone else putting money into your idea, the economy of working alone may no longer be seen as a virtue. You have to start looking at things differently.
The main reason is that most investors want results, and their profit, in as short a time as possible. They’ll be reluctant to back you if they see you trying to do everything yourself. The more ambitious your invention or the more investment you want, the more they’ll reason that you can’t do everything well enough or quickly enough to be a safe bet. You have to prove to them that you’ve got the resources to make things happen quickly and successfully.
It also helps to demonstrate resilience, which roughly translated means the ability of the enterprise to carry on if you fall under a bus. All that may mean putting together a team, not just to share an increasing workload but to make you more investible.
You don’t need a big team; in most cases one or two other people will do. It does however need to be a balanced team, covering all the different aspects of exploiting your invention. In particular it needs to include business skills - often missing, in many cases because all the early focus has been on technology. For example, we’ve assessed many proposals from university research teams whose technical strengths are beyond dispute. Frequently though, there’s no one on the team with business experience. This typically shows up in a lack of credible data about market potential and routes to market - the only things that matter to most external stakeholders.
You can build a team in several ways. For example:
Blink and you’ll miss this section, because there’s very little decently-funded help in the UK specifically for inventors. While there are
far more resources such as inventors’ clubs and patent clinics than there were when we first got involved in invention support, most are small, local initiatives which owe their existence to a few dedicated, overworked and undervalued individuals and have no funds to invest in good inventions. An honourable exception is the Welsh Assembly Government’s Wales Innovators Network (www.win4wales.com) for inventors resident in Wales. WIN is a rare example of high quality public sector support for inventors with a range of funding schemes, but even so, funds for investment are limited and must be match funded by the inventor.
By and large, this is the picture of help for inventors in the UK:
Apart from invention promotion companies (see Project 3, Can success be bought?) you need to watch out for cowboy business or marketing consultants, especially when you’re looking for people to join your team. Three examples we know about - there are countless others - illustrate how much of a menace they can be.
Raising finance for inventions is nearly always difficult but not impossible. We’ll get to sources of funding later, but rule number one is: the lower the risk to an investor, the better your chances of getting funding. There are two basic bands of funding requirement, which we’ll call Band A and Band B. Some inherently expensive high technology inventions may have to skip Band A, but for the typical private inventor this is how it goes:
Informal or goodwill investment. Comparatively small amounts spread through the very early stages, typically for technical work needed to prove your inventive step and perhaps for IP protection. The risk is at its highest for other stakeholders because so little is known about commercial prospects, so don’t expect to get funding from anyone but family and friends - though it’s possible you might get useful non- financial help from sympathetic companies or support organisations. The benefit for anyone brave enough to go for it is that a small investment now could be worth a great deal later.
Formal investment. Comparatively large amounts to exploit your idea effectively once it has reasonably assured prospects and a business plan (Project 8). The risk will stillbe high and you’ll be bidding against stiff competition from other, often safer, investment options. You’ll therefore have to convince potential stakeholders that:
Many inventors scupper their chances by asking for an unrealistic amount of funding, and asking for too little can be just as unrealistic as asking for too much. It’s therefore important to calculate the costs for which you want funding as accurately as you can. This may not be easy but anyone with experience of assessing funding bids will know more or less at a glance whether you’ve put in the effort. You don’t have to itemise everything down to the last penny and indeed some modest scaling up is prudent, but you need to present the sort of round figures that someone with experience can look at and say, ‘Yes, that’s about right’. To be out by up to 30 per cent may be acceptable but to be out by 300 or 3000 per cent could propel you straight to the Reject pile, so don’t pluck figures out of thin air. The excuse we hear most often - some variant of ‘I’ve never done this before so how should I know?’ - just doesn’t wash. Find out.
You can ask for too much in two ways. One is to ask for an amount that may be correctly calculated but grossly exceeds the investment limit of the funding body. This can suggest that you think money grows on trees.
The more common way though is to ask for much more funding than is actually needed to do what you propose. Unless you can fully justify it, you’re likely to get short shrift, especially if you include a request for generous income substitution (see Income replacement). Serious overbidding can raise suspicions that:
There are also two ways to ask for too little. Where underbidding is obvious (for example, asking for £2000 when more like £20,000 would be needed) it tends to be an innocent error of inventors on low incomes who perhaps assume, not unreasonably, that if they can get by on peanuts so can their invention. The problem is that sympathy may be in short supply at the point where a funding decision has to be made. Rather than win points for frugality, you’re more likely to lose points for a lack of realism if what you want to achieve is impossible on so little money.
Underbidding may be less obvious but much more damaging in cases of tactical bidding, where the amount requested is tailored to what the funding body or investor will (or might) give rather than to what the invention actually needs. The usual motive is to get some money rather than none. If costs really can be trimmed, fine; but if they can’t and serious underfunding goes undetected, a likely outcome is the worst of two worlds: the invention stalls and the investment is lost unless more can be poured in, which always smacks of throwing good money after bad.
Lesson: take a tip from Goldilocks and The Three Bears. If you ask for funding, it shouldn’t be too much and it shouldn’t be too little. It should be just right for what needs to be done.
Many applicants for innovation funding include a sum for personal living expenses or income replacement. Some of the requests we’ve seen have been generous to say the least, equating to senior executive salaries.
There are no hard and fast rules on this, but in general:
Many inventions undeniably need a lot of investment and support to get them into production. But for many others, production isn’t really a problem. The key to their success is skilful marketing, and marketing is an area where there is usually plenty of scope for trimming and controlling costs. If you do your own marketing and link it to a strategy of making sales before you manufacture, you may be able either to get by without any external investment, or to raise it much more easily.
Let’s start by dismissing two sources of funding that many inventors pin their early hopes on:
Banks won't fund inventions or high risk start- ups unless their lending is guaranteed in full, for example by your house. Bank lending is cheap, but it can only be cheap if the bank doesn’t take any risks. Banks don’t come into the picture until you’ve got start-up finance from somewhere else and you’re trading.
Venture capital investors
These range from big names like 3i (Investors In Industry) to lesser-known regional enterprise initiatives. Venture capitalists are supposed to take risks but (a) they won’t take any risk they can avoid and (b) they usually want to invest at least £250,000 in an existing and expanding business run by proven managers for an annual return of 30 per cent or more, so they’ll barely glance at a small start-up or pipsqueak private inventor, no matter how promising the product. Later maybe, when you’re an established entrepreneur, but not now.
For an individual prepared to launch a small business venture to license IPR or market a new product, the basic sources of funding are:
The following checklist is partly an action planner and partly a reminder of what matters. If you’re tempted to think ‘I don’t need to do all this stuff’, it may help to point out that we’ve modeled the checklist on questions professionals are very likely to ask if you want their advice, support or money. We therefore have to be stern and say that if you aim to be a respected and successful inventor, you can’t afford to duck any of it.
Producing one isn’t many people’s idea of fun, but there are some things you just can’t do without.