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Why Do It?

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.


Building a Team

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:

  • Use the ‘family and friends’ approach, recruiting people whose abilities and personalities you already know well.
  • Create a virtual or stand-by team of specialists you can call on when needed: for example, a product designer, accountant, business adviser, component supplier, university test facility. While not a front-line team, their expertise and goodwill could be crucial so it pays to put them fully in the picture, especially if you’re likely to need their input at short notice.
  • Contact a local inventors’ club and see if you can recruit a team from among their network. This may include retired professionals looking for a new challenge. (We know of one successful entrepreneur/inventor who owes the strength of his IPR to a retired patent attorney who was happy to work for a much lower rate than if he’d still been in practice.)
  • In the case of a heavyweight enterprise you could line up a professional management team for a real or intended company. However, it may not be easy getting useful involvement from people who may already have other commitments. They may also have strong opinions about how things should be done, so managing your managers might not be easy either.
However you build your team, these points are important:

  • You must be able to convince team candidates that your idea has commercial potential, otherwise you’ll struggle to get anyone worth having. Think of raising a team as a dry run for the later challenge of persuading companies and investors.
  • You can’t afford to carry passengers. Only choose individuals who can contribute something you lack, and whose total skills give you the balanced team you need. They shouldn’t duplicate each other’s skills either, or you risk having your team weakened by internal tensions.
  • Everyone’s effort needs rewarding. It’s straightforward when professionals simply charge their normal rate, but team members recruited on an unpaid or risk-sharing basis will have a right to be recognised as stakeholders. Before the teamwork starts you should (with appropriate legal advice) construct a mutually acceptable reward agreement for everyone to sign.
  • Every team needs a leader and there may be sound reasons for it not being you. But it’s your show so any decision about leadership should be yours to take after discussion with all other team members.
  • If you stay leader, stay in charge. Keep track of what the others are doing and try to understand what motivates them, especially any you don’t know well. Beware of letting one or more of your team gradually seize control of everything.
We've seen this happen, so make sure that if it should ever come to a showdown, you can ditch them rather than they you.

Insist on every team member (apart from legal professionals) signing a non-disclosure agreement before being allowed access to key information. This must include family and friends, if only to impress on them the importance of not making unprotected disclosures.

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Sources Of Help For Invention

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:

  • At the very early stages of an invention you can often get good basic guidance locally from a few professional volunteers and from inventors’ clubs (try Googling and ). But little or no funding.
  • When you’ve set up a business to exploit your invention, as explained in Project 6, you may be eligible for some of the funding and support schemes available to small businesses.
  • In between the two, there’s precious little practical help unless you’re prepared to pay for it. Consider yourself a nobody, but let that inspire you to try harder.

HELP YOU CAN DO WITHOUT

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.

  • An inventor was persuaded by a consultant to remortgage her house to buy plastic injection moulding equipment she couldn’t use when there were several plastic injection companies nearby, all perfectly capable of doing the work.
  • An inventor let two consultants manage his start-up company. They took all the funding as ‘expenses’ and for months refused to let him see his own books.
  • A consultant employed to run a local authority enterprise scheme managed to get substantial grant funding for sixteen start-ups. Fine, except that he spent most of it on ‘feasibility studies’ done by marketing companies that all turned out to be him. None of the start-ups survived.
Anyone can set up as a consultant and until you know your way around it can be difficult to tell the good from the bad or indifferent. Another problem with consultants is their tendency to see your needs only in terms of their speciality. For example, for the same business an IT consultant might recommend a better IT system, a marketing consultant a better ad campaign, a management consultant a better business plan, and so on. You might end up with several expensive options but no idea which of them, if any, is worth pursuing.

Always beware of putting yourself at the mercy of someone whose contribution you can’t assess or control. Take small steps you understand rather than big ones you don’t. Progress might be slower but it’ll be a lot safer. As general procedure, if anyone approaches you wanting to pal up as an associate, consultant or whatever:

  • Be particularly wary if you only meet them in a social environment and never get invited to a place of work. Are they really who and what they claim to be?
  • Try contacting the names they drop. Are they known? Have they really done what they say they’ve done? Are they recommended?
  • Google them, especially if they claim to have a reputation in their field. If nothing comes up, you have to wonder.
  • Does their lifestyle stack up? For example, conspicuous spending could be a mark of success or it could indicate mounting debt and an urgent need for another sucker.
  • Test them. Ask them to do something small but useful. Does it happen?
If this all sounds extreme, bear in mind that a business run by a novice, perhaps with a decent pot of start-up funding in the bank, is just what some silver-tongued parasite will be looking for.

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Raising Finance

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:

Band A
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.

Band B
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:

  • Your product can be successful and profitable.
  • Your business aims are realistic and achievable.
  • You’ll spend money wisely and responsibly.
High risk is usually associated with a lack of hard information about prospects. Band A is very much a leap of faith all round, but you can reduce risk considerably in Band B. One way of doing this is to get firm orders or letters of intent from customers, and so where possible you should try to win orders even if you haven’t yet got a product, or have only a few prototypes to sell. Evidence of even a handful of sales is more reassuring than a glowing report on technical performance but no sales. A potential backer then knows at least that the product can sell.

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Sources of Funding

Let’s start by dismissing two sources of funding that many inventors pin their early hopes on:

Bank lending
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:

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Project 7 Checklist

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.

 
Your team:
  • Identify the people in your team, indicating what each will do.
  • State how each will be rewarded for their involvement.
  • List other resources available to you or members of your team.
  • If you don’t want a team, explain how you’ll cope alone with all the different aspects of exploiting your invention.
  • Identify skills and resources that you’ll need but don’t have. What are you going to do about them?
 
Funding:
  • How much external funding will you need, and what for?
  • Provide evidence to show that your figures are realistic.
  • Find out which sources of public sector funding you might be eligible for.
  • Find out which sources of private sector investment might be available to you.
  • State how you’ll reduce risk to investors.
  • If you need income replacement, justify it.
  • Plan how far you can cut costs if offered less funding than you want.
 
Remember:
You’re now entering an environment where inventions per se cut no ice. You must offer a well-managed business venture leading to high profit for relatively low risk.

Next Project…..
PROJECT 8
Project 8

Business or project planning

Producing one isn’t many people’s idea of fun, but there are some things you just can’t do without.


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