1. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Entrepreneur Questions

    Discussion in 'The Lounge' started by Lewdog, Feb 4, 2014.

    With all the people on this board I'm sure there is someone that can help answer a few questions I have, and I'd greatly appreciate it! :D

    I've had this very simple invention idea for years. It would take less than $.50 to make and sell for $4.99 or more. The problem I'm having is that any site that says they help you get your invention made, marketed, and sold charges thousands of dollars. I need to find and interested investor that could help get the ball rolling. Other than going on Shark Tank [​IMG] is there any other place I can go that isn't going to cost me to look for investors?
     
  2. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    You can research different investors or investment groups and pitch to them. A couple of things to think about right off the bat:

    1) one thing investors often like to know is how well the invention is protected. In other words, when you get ready to launch this product, what if anything is going to stop the big players who already occupy this industry space from coming in an squashing you? There's not necessarily one right answer to this, but it is something to think about; and

    2) how much control are you willing to give up? When investors come in, they often want to bring in their own people, or at least people they've approved, to run things and look after their investment, especially if you don't have a track record doing that sort of thing. That catches a lot of inventors by surprise and sometimes limits how much investment they are willing to take in. I know one inventor who basically stalled in the investment process because he insisted on keeping at least 51% control, and at least in the case once he got to a certain point he couldn't get the kind of capital that he needed.
     
  3. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Well from what I've researched, I have not found any product out there remotely close to my idea.

    On the second part, I don't really care about control, because most often the people with the money got there because they know about business and their decisions are going to be the best ones in order to make the most money.
     
  4. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    Yeah, I think that's the best answer to the second part. On the first part, even though there is nothing out there right now, you have to consider that there are companies out there equipped to exploit the market once they learn of the idea. And they may already have the manufacturing and distribution infrastructure in place to exploit it better than you do. So for the time being I wouldn't disclose the idea to anyone other than potential investors, and then with the protection of a non-disclosure agreement, to ensure that the intellectual property is protected. Investors may very well want IP to be part of the business plan.
     
  5. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Right now there is only a handful of people that know my idea, two of which are those 'invention' companies that have a non-disclosure clause. It's just amazing how much trying to do an invention costs. Patent searches and applying for patents are unreal! I'm not really even sure how much I would need from an investor, because if they know people they might want to do all the patent stuff, licensing, prototype, and marketing through their own people instead of a company.
     
  6. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    Yeah, they might have their own people. The important thing is to keep it protected in the meantime. A disclosure outside of an NDA can jeopardize a lot of patent rights.
     
  7. Duchess-Yukine-Suoh
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    Duchess-Yukine-Suoh Girl #21 Contributor

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    If I may ask, what is your idea? (If you don't want to post it on the boards, message me! I promise I won't steal it! )

    I have a good idea for a video game....
     
  8. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    I'd hate to have to hire a hitman!

    [​IMG]
     
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  9. shadowwalker
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    shadowwalker Contributing Member Contributor

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    I would suggest you contact your local SBA (Small Business Association). Even if you're not planning on going into business yourself to produce your invention, they may be able to steer you to reputable people/organizations that can help you figure out how to accomplish your goal.
     
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  10. NigeTheHat
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    NigeTheHat Contributing Member Contributor

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    There's an article here about finding people:

    http://www.forbes.com/sites/dailymuse/2013/02/13/5-steps-to-finding-investors-for-your-start-up/

    An awful lot of it seems to be about leveraging who you already know. Have you considered a business loan?

    One thing I'd do before going any further, though, is get some proof of market demand. Often, the reason there's nothing like X on the market is that every time people have tried to sell X, they've found no-one wants to buy it. I'm not saying that's the case with your idea, but it happens often enough that I'd expect you'll need to prove the market actually wants what you've got before most investors will be interested.
     
  11. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    what about crowdfunding?
     
  12. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    I was looking at that, but I'm afraid to put my idea on there and a possible investor steal it, because I don't have the money to patent it yet.
     
  13. MrReliable3599
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    MrReliable3599 Member

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    From personal experience:

    Our group of three created a new product and put it on the market. A big company sensed that we were on their playground, and they sent New York lawyers after us. Fortunately, the person who was providing the main source of funding expected the attack and was prepared for it. Otherwise our personal finances would have been destroyed.

    The legal wrangling went on for over a year and a half, careening between two states. Although there was constant action, the merits of the case were never looked at by a judge or a magistrate. All legalistic BS; jurisdiction, discovery, motions, more discovery. Their intent was not to sue us in court, their intent was to drag this out until we'd lost all our money. Finally, after a couple million of income for attorneys from both sides, once they realized we were going to survive, they pled for settlement.

    Business litigation is different from personal litigation. It will make you cynical. Business litigation has very little relation to what is right or what is wrong, or what is legal or what is not. You could think you're protected up one side and down the other, but if the attacker has deep pockets, and you don't have a big stash of cash for your own high-powered attorneys, you'll be destroyed before you even get close to the issue of legality. It's sick, but if you have enough money, you can destroy anybody you want.

    I wish I had a dollar for every time I heard, "They can't sue you! You haven't done anything wrong! You have copyright! There's no way their claims would ever stand up in court!" Correct. There is no way their claims would ever stand up in court (verified by the magistrate who presided over the settlement negotiations). See "legal wrangling went on for over a year and a half," above. Being right and "legally protected" and a buck will buy you a cup of coffee.

    I describe the settlement proceedings as "legalized blackmail presided over by a federal magistrate." We sat in one room with four attorneys all day at the federal building, while the other lawyers sat in another room across the hall, while the magistrate commuted back and forth with offers and rejections and counter-offers. The magistrate said their claims would never hold up, but unless we were prepared to spend another few hundred thousand dollars in legal fees that would it would take to get to court, it might be a good idea to settle.

    Never underestimate the value of an expensive, comprehensive business insurance policy.
     
  14. MrReliable3599
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    MrReliable3599 Member

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    Also a great question. I have personal experience with this, also.

    My best friend had a process patent involving IT. He needed funding to make it real. The 51% question is a double-edged sword. Unfortunately my friend got slashed once in each direction.

    The first investor (shark) agreed to infuse a substantial block of cash, which was desperately needed at that time. The night before the scheduled wire transfer, he called the inventor with a bunch of new conditions. I saw it coming. Over the next few months, funding dribbled in, the investor gained more and more control, until that control exceeded 50%. Once that happened, new board members were appointed. I'll never forget that board meeting where my friend was voted off the board and out of the company he'd founded. Don't blow off the issue of control.

    The patent was then owned by the company, and my friend was left with nothing. Now, that sort of thing is illegal in my state, in order to prevent a shark from coming in and stealing a patent from an inventor. He pulled off the swindle flawlessly, but after a few years of lawsuits, the patent came back to its rightful place with the inventor.

    My friend swore he'd never relinquish control of his company again, and I don't blame him. Unfortunately, that was ten years ago, and he can't find any investors willing to pony up the kind of dough he needs without gaining control of the company.

    I don't know what's right or wrong here with regard to maintaining control. The ideal solution would be debt financing if you can swing it.
     
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  15. Mans
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    Mans Contributing Member

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    I am an inventor as well. If I want to explain about my designs it will be a long comment. I have invented a mechanical tool that it draws the ellipsoids with various dimensions. ( away from the selfishness)I am the only inventor in the world that have been able to make such a device. I never offered it to any company for production, but now, it is held in a mathematics exhibition of a training organization. Then began to design other devices. Recently, I have designed a mechanical intelligence valve for Natural Gas industrial. When I finished its perfect design, I didn't seek for any investor, because I prognosticated that the most of them don't understand its value ( because of lacking specialty ) and may are not interested to invest on such invention. So I referred to the N.G organization directly. I offered my design to the engineers officially. They approved it technically in a meeting and offered, to pay a budget to me so that I make a sample of that valve. Now, I am writing the proposal of the design and going to make a sample of that valve in an engineering corporation. The N.G organization has promised to give me an individual official corporation and support me in any way ( among money, producing the valve or buying it). Their decision is serious and official so I think there is not any problem in this way and after years of designing I will get my rewards.
     
    Last edited: Feb 5, 2014
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  16. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    congratulations, mans!... i'm glad to know that your years of hard work are finally paying off...

    love and hugs, maia
     
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  17. Mans
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    Mans Contributing Member

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    Thank you very much maia, I think the destiny has divided the talents between we humans fairly. So everyone has his/her own gift. You, as an expert writer, editor and mentor and me like a inventor. But the certain thing is that, I have not tasted the favor of the writing reward yet and hope to taste :D
     
  18. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    I found the site Indiegogo for crowd funding, but as I mentioned earlier, I don't want to put too much info on my product so someone could steal it, but I need to put something in order to get people to invest. Any ideas? It also asks for some kind of perk for people who donate. I don't have a product to give out yet, because there is still a lot of work to be done. Any ideas on that as well? The only thing I can think of would be to send them email updates on my progression with the product.
     
  19. stevesh
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    stevesh Banned Contributor

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    It's really impossible to offer any meaningful advice without some idea of what your 'product' is. If it's some sort of industry-specific device, then mans' advice would probably apply. If it's a consumer product, or worse, a game or app, I doubt if anyone is going to fund you without you giving up a lot of information and the aforementioned control.

    What you're doing now is the easy (and cheap) part, anyway. I remember reading a story years ago about a guy who invented a credit-card-sized plastic card which contained two swing-out key blanks so you could have a spare house key and car key in your wallet. Clever idea, and he patented it easily enough, but it cost the guy over a million dollars to set up production and bring the thing to market. I don't know if he ever made his money back.

    My point is that, as the radio talk show host Bruce Williams used to say, "Ideas are a dime a dozen, looking for change." It's the ability to do the work involved to bring a product to market that's valuable.

    If I were you, and I were convinced that my product was a world-beater, I'd worry about coming up with the money (on my own) for a patent (assuming your idea is patentable - if it isn't, I'd forget the whole thing). Then I'd have something to sell to investors. Please don't be taken by the 'Inventor Service' scams. There are plenty of solo patent attorneys around who work for an hourly rate and can give you a pretty good idea about the costs involved.
     
  20. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    @stevesh I have to disagree with some of the things you just said. I've seen plenty of products out there that aren't 'world beaters' that have gone to market and made millions of dollars. In fact there is no way of knowing just how popular an item will be until they actually go to market. There was a guy on Shark Tank, and whom I found his product online, that is nothing more than a microwave safe square plastic bowl to make Ramen Noodles in, that he has made millions of dollars off of called Rapid Ramen. Now the is a niche market if I have ever seen one. My idea is about as cheap as that to make, but serves a purpose that would reach a lot broader market. It's an accessory to every day item to make it safer, is reusable, and add to the item's aesthetics.
     
  21. shadowwalker
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    shadowwalker Contributing Member Contributor

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    You might want to check out Bankrate's article here http://www.bankrate.com/brm/news/investing/20010413a.asp

    Not only does it list a couple of things you, as an inventor, should check out, but basically tells you how investors should look at inventors and inventions before putting their money into them, which might give you a new perspective (as the inventor).
     
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  22. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Thanks I'll check it out. :)
     
  23. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    @Lewdog

    Keep in mind that a patent isn't always necessary, though often from a practical standpoint you'll want to have one and the investors will want to see that you are protecting the IP. This is particularly true if there are relatively few barriers to entry into the market and the invention is easily reverse-engineered. In some cases, even if the ultimate likelihood of a patent issuing is in question, it can be worth filing to get 'patent pending' status and hopefully keep competitors out of the market for a while - having exclusivity for the term of 'patent pending,' or even a portion thereof, can be invaluable if it keeps competitors out and means that you're the only player for a period of time.
     
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  24. stevesh
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    stevesh Banned Contributor

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    Actually, you kind of agreed with me. The guy took a non-patentable plastic bowl and marketed it as a Ramen cooker. He didn't invent anything, and the hard work of setting up production had already been done. If your product alrady exists, and you just want to advertise it for another purpose, forget what I said and contact the current manufacturer to inquire about pricing, etc. and start working on your labels and packaging and advertising. I don't know what Shark Tank is, but maybe you can hook up with them.

    On the other hand, if your product is actually new and currently patentable, I'll stand by my previous post. Getting it to market is the hard (and expensive) part. The idea isn't really worth much.

    Also, if your product is some kind of add-on to an existing product, it would possibly make sense to contact the existing manufacturer and ask if they would be interested in helping you with development.
     

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