You’ve got a great idea for a promising invention, the drive and commitment to turn it into something tangible, and the knowledge and experience to present it to the world, but what about the capital? Despite being incredibly clever, many aspiring inventors have no idea how to finance their inventions.
Without the seed money needed to manufacture, advertise, and distribute your invention, your great idea may never see the light. Luckily, in most cases, you can find several sources waiting out there to finance your project if you know where to look. If you don’t know where to start, take a look at our list of the best ways to obtain financial backing for your big idea.
Pursue A Grant
Many programs sponsored by national governments offer grants to fund the development of promising inventions; however, getting a grant is no easy task. The lengthy application process that you’ll likely go through will require dedication, persistence, research, and thorough preparation.
Even though these grants typically offer a small amount of money, they’re still an option worth pursuing. As the successful creators in American Inventor Spot explain, any grant can provide your big idea with the exposure it deserves regardless of the size of the paycheck it offers. Additionally, even if the grant money isn’t enough to produce hundreds of replicas of your invention, it can still help you through the research and development stages.
Seek Venture Capital
A venture capitalist is an investor who supports new inventions that show promise of bringing profit and revenue in return for their investment. While finding a venture capitalist who believes in your ability to turn your invention into a successful, profitable product is a good way of raising funds, convincing them to invest their money on your idea won’t be easy to achieve.
All capitalists will probably be looking for the next big thing, which means that for you to convince them that your invention is worth their money, your proposal has to convey scalability, and your business model has to be fine-tuned to perfection.
Apply For A Microloan
Microloans or microcredit is a financing method that’s based on peer-to-peer lending principles that differ from traditional bank loans. Microfinance institutions are typically more willing to grant loans to individuals who are normally deemed high-risk by banks.
The main purpose behind microcredit is to provide a sequence of small loans to self-employed entrepreneurs and aspiring inventors who lack collateral or verifiable credit history. Although they are typically modest and require various documentation, references, and financial statements to qualify for, microloans have low-interest rates and don’t require collateral.
Crowdfund Your Invention
Crowdfunding is a proven way to get the initial funding needed for the production and commercialization of a project. The way it works is simple; all you have to do is choose your preferred crowdfunding platform, post a compelling pitch that describes your invention and ask for a certain number of pledges to complete the project. Most projects offer a wide range of pledge options starting at a few dollars and going up to at least a few hundred dollars.
If the number of pledges is reached, you get the funding you need to finance your invention, and if you don’t reach the minimum number of pledges you need, you still get valuable market feedback. In that sense, crowdfunding your invention is a win-win situation.
One of the challenges that are related to this option is that the crowdfunding platforms have strict regulations and are usually very selective about what projects they’ll post. Most platforms prefer projects that show artistic creativity and reject the ones that solely aim to raise funds to start a company.
Nearly all of the inventors who have succeeded in crowdfunding their projects have one thing in common, which is that they’ve managed to offer something tangible in exchange for a pledge. To show your invention’s true potential, consider creating a compelling promotional video that reflects its value.
Reviewing the different funding options can seem like a dull and overwhelming task, especially when you want to devote all your time and energy to perfecting your big idea. However, your great idea can only live up to its potential if it’s backed by stable capital.
The best method of acquiring capital depends on your needs and current financial situation, and what works for one aspiring creator will not necessarily work for another. So, take the time to reflect on each of the available options before you make up your mind to make sure you choose the most appropriate method that’ll help you bring your creation to life.
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