I could write an entire website on this topic so I will try to keep this short and to the point. I am sure most of you have heard of the phrase "Friends, Family, and Fools". Getting funding help from those sources along with credit card debt are probably the most common way for inventors or early stage entrepreneurs to fund their patent costs. I would like to move a step beyond that and explore some other sources of funding.
Source 1 - Grants (local, state, federal, and non-profit)One of my favorite startup companies that I work with (I wrote their first patent application) was just awarded a $50,000 state wide grant for their new idea plus they previously received a $150,000 SBIR grant from the federal government. Using grants as sources of funding are ideal because they are essentially free money. You don't have to pay that money back and you don't have to give up any equity in your startup. Of course they are also very competitive and hard to get. The best (and free) source to find small business grants from the federal government for a new technology related company is:
http://www.zyn.com/sbir/. Did you know you can get free help finding and writing these types of grants? Most states have local developmental centers that know of these types of grants and they can help you find them and apply for free. You don't have to pay for their services (your tax dollars fund these groups). To find them search Google for your state name plus small business or your state name plus SBIR. For example, I am in North Carolina and when I search for "North Carolina SBIR" the first result is the SBTDC which has offices across the state and one of their missions is to help you and your small business succeed and find grants.
Source 2 - Business Plan CompetitionsBusiness plan competitions are not only a good source of free money, they often allow you to network and connect with people in your area who can help you with your new business or in bringing your ideas to market. The local business plan completion near me in Charlotte, NC is offering $100,000 in prize money this year to the winning teams. (fun fact: I wrote the original patent application for this year's winner CanDiag!) Besides the money and the networking, these competitions usually offer free mentoring and seminars to help you build your business and develop a commercialization plan. You can try searching google for your closest city name and business plan competition, or you can try calling your local university technology transfer office (or find them online) and they should know of any competitions on your area.
Source 3 - Angel Investor Networks Angel investors are usually wealthy individuals who are willing to invest in very early stage companies or even people with a good idea and a good business plan. The usual amount of their investment is between $50,000-$100,000. Unlike the two sources mentioned above, this type of money is not "free". You will have to give up equity (stock) in your company in exchange for this type of investment. Most cities and large towns will have an angel investment group. The one near me meets once per week and it's a great place for inventors and entrepreneurs to pitch their ideas. Even if you don't get funded it's a good learning experience and most of the angels will try to help you out and maybe put you in touch with people who they think can help you with your new venture. Here is an old director of Angel Networks. Most of them are still around:
http://www.inc.com/articles/2001/09/23461.html You can also search google or call your closest university technology transfer office and they should be able to tell you if there are any angel networks nearby.
Source 4 - Crowd Funding I must admit I don't know much about crowd funding. It seems to be a very hot area right now and a good place to raise some initial money and to also validate your idea. Most crowd funding sites allow you to post details about your idea and anyone who likes it can either donate money or pre-order your product or service. This may be a great source of income because it does not make you give up any equity in your company. Just make sure your patent application is filed before you post any details about your invention online. The most popular crowd funding site is kickstarter but there are lots of other sites as well. To learn more, you can go here:
http://www.kickstarter.com/help/school/defining_your_project
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