Invention Sponsorship: Everything You Need to Know
Invention sponsorship is a program in which a government agency or nonprofit organization provides funding for the development and creation of your invention.3 min read
Raising Capital for Your Invention
Inventors need funds to cover the costs of producing, packing, storing, shipping, and marketing their creations. Capital can be raised by attracting investors, applying for business loans, or seeking grant and government programs for which your invention qualifies.
Start by writing professional emails or letters to potential business partners. You can also consider a phone call depending on how well-acquainted you are with the individual or company in question. Try finding a local inventors' group to learn more about successful fundraising strategies.
Common funding routes to consider include:
- Grants, government programs, and federally subsidized loans exist to fund innovation. Though these grants are often very specific, if your invention fits the criteria you may be able to access funds. However, you will need to undergo a lengthy application process.
- Student innovation competitions provide funding for those who create inventions.
- With fiscal sponsorship, a non-profit organization funds an invention on behalf of a creator without tax-exempt status. This allows the inventor to seek tax-deductible donations and grants.
- Venture capitalists invest funding in an invention with the expectation that it will be profitable. Inventions typically attract venture capital, or VC, after an initial round of modest funding. You will need to have a business plan in place and show that you have invested some of your own money in the project.
Applying for Grants
The primary source of information about government grants is the official federal grants website, Grants.gov. You can also check the website of Small Business Innovation Research, which offers start-up and development funding through specific federal agencies. You can also check the websites of federal agencies related to your invention.
If your invention is related to social enterprise, you can also seek grants from non-profit organizations. If you are a college professor or a student, you can seek grants through the National Collegiate Inventors and Innovators Alliance, which provides grants for marketable inventions that display technical innovation and have the potential to provide a positive social impact.
When applying for grants, you may want to develop a prototype of your invention to submit along with the application. You should also provide a detailed business plan; the Small Business Administration website has templates and resources that can help. You'll need to fill out the grant application for each specific agency.
Since you won't be able to get grant funding if your invention is not original, search for similar inventions in the United States Patent and Trademark Office database.
Inventing Without Risking Your Savings
Many patents never make money, so investing your life savings in an invention can be a gamble. However, it is possible to lower your risk and still have a chance at success. Here are some tips to follow if you just want to test the waters without quitting your job.
- Develop inventions that are inexpensive. This allows you to keep your expenses low. Think of the pet rock--sometimes a basic prototype can be a major hit.
- Raise money for your invention on crowdfunding platforms such as Indiegogo and Kickstarter. A site called Quirky, which was profiled in Business Insider magazine, selects one prototype to develop each month out of thousands of submissions. If the invention they develop makes it to market, the inventor will receive lifetime royalties.
- If you have a great idea that you don't necessarily want to invest in, you can rent the rights to someone else in exchange for a royalty. This is also called licensing. Even if your invention is not patented, you can have the licensee sign a non-disclosure agreement to protect your intellectual property. You may want to use an agent, who can often negotiate a better royalty rate.
- Many inventors opt for the bootstrapping route, in which they start producing and selling their invention on a small scale and invest the profits back into the business. Eventually, they apply for a provisional patent, which is good for 12 months. During that time, the inventor can seek a licensing deal or apply for a full patent.
If you need help with an invention sponsorship, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.