Funding Your Invention: Get Started with Crowdfunding
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Written by Mark Nowotarski Markets, Patents & Alliances, LLLC On Twitter: patentbuzz Posted: June 1, 2011 @ 2:01 pm  |
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Getting Your Invention off of the Ground with Crowdfunding.
Crowdfunding is a newly proven way to get initial funding for the commercialization of an invention. Crowdfunding involves posting a project description on the internet, asking for pledges to complete the project, and if the minimum amount of pledges are received by a certain deadline, having the funds transferred to the project. If the minimum isn’t reached, no one gets charged.
Crowdfunding addresses the two biggest challenges many inventors have. “What is the market for my product?” and “How do I get initial funds to produce it?” Conventional sources of funds include yourself, “friends and family”, and angel investors. Crowdfunding adds a new source of funds, the initial consumers. Inventors get committed funds and guaranteed customers. Backers get to be the first to get an exciting new product. If the funds are raised, you know you have a market and you have the resources to produce the product. If the funds aren’t raised, you have valuable market feedback.
Kickstarter.com and Peerbackers.com are examples of sites offering crowdfunding services for inventions. At two years old, Kickstarter, is the more mature of the two sites. They’ve raised $40 million dollars for 7,500 projects in 2 years. Project success rate is about 45%. Their biggest success to date has been the TikTok watch band mount for iPod nanos. For pledges of $25 or more, backers received a promise of a delivery of a watch band mount once it went into production. Higher levels of pledging got fancier watch bands and still higher levels got bulk discounts. The project needed a minimum of $15,000 to launch. They raised $941,718. The sponsors started shipping the day after the project closed and 95% of the orders were fulfilled within 60 days.
It almost sounds too good to be true. And it is. Many projects have been successful on Kickstarter, but many also have not. Furthermore, Kickstarter is very selective about what projects they will post. They focus on projects with artistic creativity. They don’t post projects that are looking for funds to start a company. Many people who have had projects rejected feel that the rejection was inconsistent with the guidelines Kickstarter has posted.
On the backer side, there is no guarantee that project sponsors will ever deliver on their promises. There was one project sponsor, for example, who posted a project to make a movie only to deliver a plagiarized version of another movie to its backers.
The most successful projects seem to be those that have tapped into the mood and values of other sponsored projects. A good video promoting your project seems to be a must. You should plan on offering something tangible in exchange for a pledge. Most projects give a broad range of pledge options starting at a few $ and going up to at least a few hundred dollars and even a few thousand. I personally sponsored the building of the “World’s longest marble raceway” as an outdoor art project in Berlin. For $40 I get to help make it happen and I get 4 meters of raceway track to play with. I love the top sponsor level of this project, $6,000. For a pledge of $6,000, the sponsor will build the world’s longest marble raceway….. in your house (large house recommended).
Provisional patent applications work well with the crowdfunding approach. You want some sort of protection to keep others from immediately copying your idea once they see it posted, but you don’t want to spend a lot of money on a regular patent application only to find out there is no market for your idea. A provisional patent application is low cost and gives you a year to test the waters. With crowdfunding projects lasting only a few months, you can get timely market feedback and initial funding for production well within the one year term of a provisional patent application. You might even get in 2 to 3 project postings if your first one fails and you need to tweak your idea.
Crowdfunding is a new way to measure market acceptance for a new invention and raise funds for initial production. New websites offering crowdfunding of projects are being created and the business models are undergoing evolution. For inventors looking to promote a new idea and for backers looking to support new ideas, it’s a promising option worth exploring. Of course, before engaging in any deal make sure you read the contract, agreement or terms and conditions to familiarize yourself with your obligations and requirements.
About the Author
Mark Nowotarski is the President of Markets, Patents & Alliances L.L.C. and is a registered U.S. patent agent specializing in business method patents. He currently serves clients in the financial services, medical devices, consumer products and manufacturing industries.
Mark is also co-editor of the Insurance IP Bulletin. The Insurance IP Bulletin is dedicated to providing useful information to innovators in the insurance industry regarding the protection of their inventions with patents and ways to effectively promote their innovations.
Mark is a former Associate Director of R&D for Praxair. There he was responsible for the development and successful worldwide introduction of new products into the health care, electronics, and manufacturing industries. He was a leader in the reengineering of Praxair's patent system, and was responsible for technology planning for their home health care division.
Mark is an inventor on 17 US patents. He was appointed Corporate Research Fellow for the commercial impact of his inventions (+$300 million in sales).
Mark has a Master's degree in Mechanical Engineering from Stanford and a Bachelor's degree with honors in Aerospace, Mechanical Sciences and Engineering Physics from Princeton. His academic awards include the Sigma Xi award for most outstanding Mechanical Engineering research at Princeton and the Union Carbide Award for Academic Excellence and Leadership in Mechanical Engineering, also at Princeton.
It should be noted that both Peerbackers and Kickstarter provide a platform for donations. With Kickstarter in particular they are pretty restrictive about raising money for a business and not a project. ProFounder is specifically built to serve the needs of businesses raising money from a community of people who have a close relationship with the founders (eg: friends and family). This tighter group correlates to better success, I suspect Kickstarter would attest to that as well. Moreover, since ProFounder support legally compliant (via Reg D 504) revenue share or equity terms that commit the investors over a period of time to the success and failure of the business, you, as the business owner, can get better and more reliable support from this group. Your success/failure is in fact their success/failure. With successful raises brining in $10k – $60k from ~20 investors each this can match much better with projects that will turn in to, or already are, businesses.
Mark, I totally agree that websites like Kickstarter can be a great way to gauge market interest and creatively finance your next project. If you are passionate about what you are doing I think it shows through, and people will support you.
I LOVE the concepts of Crowdfunding and Kickstarter and ProFounder! Great concept! If you need to protect your idea then use the provisional patent video course to see how you can get your idea to market. See http://provisionalpatentvideo.com/
Also, I want to know how to include these in my class as folks ask me to fund their projects all the time. Contact me, Dave Korpi, at 831-455-0418 and let me know how to have these programs as an affiliate!
Ryan,
Thanks for the heads up on ProFounder. It’s fascinating to see the proliferation of different crowdfunding offerings.
I am an Inventor that needs Grant Funding Application.
Lonnie,
Feel free to drop me an email at mark.nowotarski@gmail.com to discuss.
Mark
I need grant funding for my inventions.
I have an Invention that needs funding.
Hi, my name is Staci. I have an invention that I am very confident in – so confident, that I’m willing to sell my home in order to get funding; however, if there are other resourses that I would be able to obtain funding, I’d choose that path; as I am a single/widow, 40 year old mother of 2 small children. By selling my home, I would be taking a risk, as it’s the only thing that we have since losing my husband. I have no idea how to get started with this invention, other than the drawing that I created. Any help with this would be greatly appreciated.
Staci
Staci,
A good place to get started is the Service Corps of Retired Executives, SCORE, http://www.score.org. This is no cost counseling provided by retired executives to help people start new businesses. They have many local chapters around the US.
Mark,
I have a device that I have been working on for at least 5 years. I’ve continuously tweaked it and I feel that I finally have the finished item. My harshest critics, my daughter and my former fiancee recently gave it the thumbs up.
What I have is a sound file which enhances physical strength, I’m guessing by 5%.. It’s based on the science and use a variety of combinations of binaural beat frequencies which I also manipulated in regard to frequency and other sound factors.
I use it for running, yoga, weightlifting, rock climbing, walking and anything that requires physical strength. In the scenario where I start walking and after a bit I turn it on I feel my posture changing, it actually seems to lift you up as if you’re standing tall. When I use it for running I’ll pause it occasionally and find that I lose speed and just feel my body seeming to feel a lot heavier. Turning it back on my speed increases again.
I know it sounds unbelievable and when I talk to people about it they look at me like I’m telling them that I saw a UFO. Most people are not familiar with the technology of Binaural frequencies. Binaural frequencies are used in most self improvement recordings ranging from sleep induction, learning enhancement, relaxation, etc.
I didn’t set out to create a physically enhancing sound file I was actually setting out to create something else. It was serendipitous.
I’m almost certain the change to a persons muscles while using it can be detected by an EMG (Electromyography).
The “sound” can be used to enhance the ability of walkers, hikers, bikers, runners, swimmers(used in swimp3). I also believe that it could be used to encourage those that are not physically fit to exercise. I found that days that I’m normally to tired to do anything physical it gives me just enough of a boost to overcome what would otherwise be my inertia.
Production would be a breeze since it is simply and mp3 file which can be put on IPhones, etc.
What I need is substantiation that it actually works through trials, EMG, etc. My sample size has been small.
I don’t have any idea how to go about this while at the same time protecting it from theft. If you can provide any advice on the A-Z of getting this to market I would greatly appreciate it. i’m not a good promoter and need someone with marketing confidence to help me.
Regards,
Dave
Dave,
Thank you for your comments. Very interesting idea. As I indicated to Stacey above, a good place to get started on how to develop and market your idea is the Service Corps of Retired Executives, SCORE, http://www.score.org. This is no cost counseling provided by retired executives to help people start new businesses. They have many local chapters around the US. They have been a tremendous help to a number of my clients.
Mark
looking for funding of nootropic
poject
inventor77@comcast.net
i am looking for investors to get my products to the marketplace and get some patents, i have been working on these for a couple years but just here and there, working alot,i have a household product, a tool, a automotive product, and a couple more,have done alot of research and nothing out there that compares to these, i am serious about my inventions, please let me know where i can get some investment money or can just sell these outright,there is alot of money to be made on these,let me know thanks for your time.
Hi Mark,
I am a kiwi guy and have an invention design for a perpetual power generator that is fuel free and pollution free
that generates DC power by itself im in the development stage of producing a working prototype & looking for investment funding or a development grant preferably to complete my working prototype and estabilish a product that could potentially be sold to every household as a in-house power generator if you can help in anyway would be greatful.
thanks & regards Neil
Neil,
If you want to patent your invention, you are going to have to provide strong evidence that it works. See http://en.wikipedia.org/wiki/Incredible_utility
Development of a physical prototype can be expensive. We specialize in taking a concept from sketch to an actual plastic prototype model. One of our recent projects is a plastic consumer product. Our client had very basic sketches with a written explanation of his product. We first developed 3 versions of a 3D CAD design, Our client picked one with a request for some changes, which we quickly did. He signed off on the final design and 3 days later. had a plastic model in hand. The entire process took less than 2 weeks at a cost of less than $1,000. Our founder has been doing product design fro over 35 years. Please visit our web site at prototype-cafe.com for more information.
Angelo Williams
22 Clinton ave
New Rochelle n.y 10801
914-563-6799
I like to sale or licensee invention or get grant funding or funding
Sanitary Medical Glove Dispenser – InnovationSupplyChain.com
gigelo2003@aol.com
Automatic Gloving Machine and Method and Glove Package for Use therewith
The Sanitary Medical Glove Dispenser is the first device and method by which healthcare professionals can automatically put on medical examination gloves in under 5 seconds that is guaranteed to be 100% contamination-free.
The current method of applying sanitary medical gloves requires a nurse or doctor to manually take the gloves out of an open box and put on the gloves using their bare hands. If the box is in an unsanitary room and/or the professional has not properly washed his/her hands, the gloves can easily become contaminated increasing the risk of patient exposure.
The Sanitary Medical Glove Dispnenser device allows for completely sanitary glove application because its unique, patented design allows the user to put on gloves without using their hands. The user presses on a foot pedal and the gloves are automatically opened and positioned for the user. He or she then puts their hands in the gloves simultaneously without needing to touch the outside of the gloves. The process is 3x faster than manual glove application because they are applied simultaneously and automatically.
This product will reduce cross-contamination in healthcare institutions like hospitals and medical offices reducing the risk of malpractice suits and will allow quicker changeover between patients, which when performed hundreds of times daily, will significantly lower operating costs.
Hello my name Milton Agurs. I was granted a patent March 15, 2012 for the hazard detection system. I now feel that I am in uncharted waters. I did not know of the completion of having the patent granted that I will still not know where to turn. I would like to know if you can offer any of assistance or advice to get my invention known to the public to begin saving lives now. Thank You in Advance.
Hi
I’M A SOUTH AFRICAN GENTLEMEN WHO HAS INVENTED ASTHMA MEDICINE THAT HELPS PEOPLE WITH ASTHMA.I AM VERY CONFIDENT IN MY INVENTION AS I HAVE LIVING TESTIMONIES,PEOPLE WHO WERE BORN ASTHMATIC ARE NOW FREE FROM ASTHMA.I WOULD LIKE ANYONE TO HELP ME FUND MY INVENTION AS I WOULD LIKE TO PATENT MY INNOVATION AND MARKET MY MEDICINE GLOBALLY.THANKS.
Hi I have an electronic invention and I have been working on it for several years I need help with a prototype and funding…..the idea has went through invent help and they wanted to push it but it was too expensive
INVENTION DESCRIPTION:
Collapsible Table and Chair Combination for Children is a child sized table and chair set that fold into an easily transportable form for convenience. Infants are delicate little beings that require the utmost care in order to protect, and keep safe from harm. Traditional tables and chairs or other alternatives cannot fully provide the safety and functionality needed for children and toddlers alike.
PURPOSE:
• Provides parents and caregivers with the functionality of a fold-able, portable table and chair set for their small child or toddler.
• Eliminates the safety concerns associated with children and toddlers sitting on their parents’ lap or in a highchair at a table.
• Collapses for easy transportation on the go and easy storage when not in use.
• Enables use both indoors and outdoors on a variety of surfaces including but not limited to flooring, grass, concrete, or gravel.
• Features a guardrail for maximum protection and safety.
• Offers all plastic assembly therefore it is easy to keep clean, especially after returning from a family outdoor trip or activities like a park or camping trip.
PROBLEMS SOLVED:
While separate small tables and chairs are available to children for use, they are not made to be in a single unit or design. Tables and chairs for children are very useful, but may not be easily transported from one location to another. This can be problematic when children need to sit down to eat, color, read or engage in other seated activities. Some parents may set their child in their lap or use a highchair, but these options can be unsafe. Therefore, there is an existence of a need for a means by which small children, can be provided with the functionality of a small table and chair set without the limitations observed.
DESCRIPTION:
Collapsible Table and Chair Combination for Children enables parents and caregivers to easily fold, pack, and transport an indoor/outdoor table and chair set for a small child or toddler. The device can comprise a firm, sturdy base with a fastened folding chair on one end and a fastened collapsible table on the other end. The base can be designed to remain steady on a variety of surfaces, including flooring, concrete, grass, and gravel. Both the table and chair can be folded to a flat configuration when in transit or when not in use. There can be a folding guardrail for added protection around the perimeter of the base. The invention can be made of lightweight, durable plastic or another suitable material. The device is preferably constructed from heavy-duty plastic in an injection molding process, with other components like the fasteners and folding mechanism. The lightweight plastic makes for easy transportation of the device. The invention features a firm base that holds the fastened folding chair on one end and a fastened, collapsible table on the other. Both the table and chair fold to a flat configuration, allowing the invention to be easily carried and transported to any location. The design may be about 4’ long and 4’ wide. The exact specifications may vary.