Most can understand why it may be difficult to receive any “handouts” from anyone, but I think most of us are hoping for a “handup.”

As you see here at EN, Shark Tank or any of the other “start up” interests groups, their mindset is “to invest” in someone’s idea and aquire some form of monitary gain for their contributions. “Angels” often do not invest unless they know obviously if the idea has proven potential, and that often must be validated with a workable prototype.

In some cases, and I will go by my own, I must have a patent to protect! I have approached someone inside P&G AND my gut feeeling was not to openly reveal my Big Idea with him without having the backup needed to protect it.

Stephen Key has demonstrated the necessity by aqiuring several patents on his “SpinLabel” idea! He too, approached P&G and they said, “That there was already a patent on his idea.” Stephen produced several patents on the method of manufacturing. And it costs $$$$$

Many of us beginners do not have the funds, and unless you are possibly seasoned in the field, it can be otherwise difficult for our “laymen” friends and family to feel comfortable fronting us the money on just an idea.

So for me, I am grateful for the opportunity EN presents…Maybe someday I will gain some “Seed Money” to help pay for the patents, prototype AND possibly the Salesperson to represent my idea to P&G.

Hi -

Well, the stark reality still remains – asking those that trust you and know you as a person will often “lend” you money if you handle it correctly. Most of the time, these people are investing in you and not so much your product idea believe it or not. It is true you should present to them a viable product and that you have done market research, patent searches, and demonstrate how you will use their money and how you will attempt to pay them back. I know many inventors who created rough prototypes and created a simple 5 age or so biz plan and raised tens of thousands and more. Angels do need to see “more” but angels are not like the people that are represented on Shark Tank for example. Angels are often well off individuals who were in the same position as many inventors and will make offers to you in varying degrees. Yes, angels like to get involved in early stage after you have proven your viability and that is the reason why inventors MUST approach friends and family to get the initial cash they need…or tap some savings that they can afford to lose. No one gets money by waiting around for it. You must go out and actively seek it. If you have a good concept, resent yourself well, and show your committment and understanding of the business you are about to start, individuals you know will get involved. I see it all the time…..Jim

I never spend more than $100 on any invention – beginning to end. I have so many ideas flowing I can’t imagine putting all my eggs into 1 basket and funding it all. I develop the idea, make the sell sheet, get some supporting stats on the market and pitch to inventor friendly companies (phone calls, emails,EN etc). No patent and many times no prototype. If I do build a prototype, it’s from esisting off the shelf parts. Hats off to those that can take a single idea and turn it into a full time business.

So, the million dollar question is…….have you succeeded by gaining placement at retail or otherwise with any of your product ideas?

I have been working on my project for 3 years, dont know how to crack this patenting business yet, some design schools i came across seemed to do little apart from brain storming and coming up with clever marketing names,

Sometimes it seems to me the problem is how to get the publics clever ideas past the professionals onto the shelves.

Brendan,

I saw two products on your youtube videos – one that hangs from a hook, and one that attaches to the hand. Right? Or wrong?

Have either of them been manufactured? If so, howabout selling them from a website?

Your products look like such fun, how could they not be a hit? Word of mouth should sell them. I can see them used for exercise, at parties, a fad at high schools and colleges, in dance routines, etc. I’d buy them both, even though I don’t need anymore exercise equipment.

I’m speaking as a consumer – I know nothing about business and I know my ignorance is showing. But the world needs your product – good luck!!

One more use for boxerballs – stress reliever! And no broken glass to sweep up! (;^)

Jim, two pending so far. I have been at it for 2 years. For example, one is PLAID. They will evaluate ideas for free and if they like the concept, will have the product produced and include it in thier current retail distribution – Walmart, Michaels etc. For me it’s manufacturers that I am selling to not retailers. Making a product oneself and selling to retailers seems very difficult but I applaud those going that route since greater the risk greater the reward.

Brendan Hi,

That’s a cool invention. now repeat after me, show me the money.

Funny thing Michael in that I used to deal with Plaid when I manufactured magnifiers for the craft industry. I was working on a joint venture with them that just never materialized. I ultimately sold our products to every major craft chain including Michaels, Jo-Anns’ Hobby Lobby, AC Moore, Hancock, etc and my products are still sold in those and many other chains to this day! If you have questions about those retailers or Plaid I will try to help….

Nice, I would ask – do you have other contacts that license concepts for manufacturing and distribution to retailers? If so, post em hear. We have a good list of manufacturers on this forum that do just that. I am sure knowing alot about the manufacturing side might help presenting only the most viable products to manufactures for license. I tend to concentrate on new ideas and leave the manufacturing decisions to the pros. My other question is – do you think fulfilment/manufacturing experts have a hard time comming up with novel new concepts? Seems everyone from Telebrands to Plaid is willing to look at ideas / pay a royalty and do all the production and pay all costs…even the patent if needed.

That’s nice Jim but everyone I know is poor or thinks I’m insane so…But you are right I have been given $20 a few times now for the LPSs.

Jim…I think the figure of most getting financing from family and friends is because many very rich successful entrepreneurs had a good start from rich and successful family who would gladly kick in some cash on a good idea.

If your family is not well off than I think it is a different story. If you hang around all working class friends and there are no big financial successes in your family, they will have a very hard time sharing your vision and reluctant to share their little hard earned cash with your sure fire get rich scheme.

So…family and friends according to statistics I have compiled in a couple decades and more, family and friends can be great supporters or they can be the worst too. Some experts in our field say never seek financing from family and friends and some say as you do, strike a deal with those closest to you.

HOWEVER!!!! BE CAREFUL…financing with angels or family might be VERY expensive in the beginning when you are a long shot at best. For instance, I know one inventor, many like him actually, he gave up 50% to family and friends and now he can’t shake them after he became very successful! These people sit around and watch the action, the inventor breaks his ass every day placing orders with the manufacturers, fulfilling orders, marketing, attending shows…you name it…and for a lousy $50,000 these people gave him, small tiny change now to him…he has to share with these people.

Even with angels it’s tough and start up money is VERY expensive. I had angels approaching me..so I know…that is RARE! They wanted half of everything for a lousy $100,000 and some wanted even better deals like 20% for $20,000. i took no money…no way…instead I used the manufacturer as help. Heck…I’m not Santa Clause! I bring them a good product, they can kick in some help too! That was my feeling…forget the angels who were mostly lazy and greedy I thought.

All thought I was nuts…but I pulled it off. All I can say is you hear of one or two “systems” of obtaining capital or financing or just what you need for your launch. There are no rules like people think…get creative!

Don’t try to pull this off with just a smart-ass invention. You better have many hours of research done, hours in the shop or wherever absolutely proving your invention works, and some potential customers you have contacted so you can prove your product can be sold. Do this and you have more leverage….otherwise an angel investor will cut a deal with you that will almost allow them to suck all the blood out of you almost….or so they will want to…many times. Be careful! A little extra work in the beginning can save you big percentage points and profits later.

If I struck a deal today with investors after I am so much proven, their share would get much smaller…this is how it always works. Trust me, I know…but my stories and advice will not be 100 % of everyone’s situation either. Some may find an angel in every true sense of the word….but these people are VERY hard to find…I know…I’ve sought them.

A good place to start is www.go4funding.com (recommended by the Wall St. Journal) Alot of investors have turned to the internet to locate investments.

Its a catch 22…you need the money and may have to give up a lot but if you can reach some level of success on your own then the “cost” of taking investment dollars will certainly be less.

The fact is though Ron that many middle class people raise money through friends and family and have done so. It is not just for the well off. I deal with entrepreneurs every day as you know and I constantly hear stories of people of normal means raising a nice amount of cash…and in many cases enough cash to get to a level where they can start making some money which allows them to grow. It is true that inventors must be very careful with people looking to take half their biz for a few dollars, but people get desperate and that is when problems begin. I had a client that was an average Joe and worked in sales and did not earn much but he was apparently well liked by his customers. He approached his customers and his family and he raised more than 80k in just a few months and most was from his best customers. They knew him as a business person and trusted him….and so this is a great example of being creative like you mentioned.

Anyway, it goes without saying that you need to have a viable product and have a good head on your shoulders. But, just like you mentioned about inventors needing to do a lot of the work themselves, raising money is no different. They MUST be proactive and be able to convince people that they have something viable and “sell” them on investing in them. I see it all the time….and those people tend to do better in the long run with their products….

Jim,
Where does the Small Business Administration fit in with us inventors? Would it be a possible way of getting funds. I think with this new stage that the country is in, it can be an option. I rather this than have to deal with family, friends and others.
Gladys

Lots of great info and advice Jim, Thanks for sharing your knowledge.

Gladys,
I had gone to the SBA where I live and they were a great resource. If you haven’t tried that give it a shot. I dont know if it varies state by state but here where I live, I would have to start my own business to get help from them. I would qualify for some Grant money because I am a new woman in business. Then there are loans but I did not qualify for any so I couldn’t get too far with the SBA. They are located at the university and utilize college students to help keep the cost down. The engineering students can be helpful with prototyping, graphics arts students can do a logo & sell sheets, business students can help write the business plan etc…. Like I said, I don’t know if it the same everywhere, I can only speak from my experience, but it’s worth a shot.

We were lucky enough to have a close friend offer some money to help get the first invention to market but we have not taken it. It’s still too early in the game to get desperate so I am trying to get my invention out there to as many companies I can. Companies don’t charge to look at the idea so it’s work a shot. I am still learning my way through the process and there is a lot more to learn.

The problem is, if your the one who is being asked to loan money. The guy with the stick on a rope invention, asked us to invest. He was so sure his idea was going to be a hit, he was going to let us in on it. And it goes back to, “I don’t want to be that guy” thread. Had this guy exhausted all his family and needed outside help? When this guy goes to visit family, do they run, do they avoid, knowing this inventor was going to hit them up for cash for his next crazy idea, we hid when his car drove up…Honestly, I know a good idea when I see one, but, just because someone invents something, I’m not going to invest unless the inventor in my head says, WOW!. I’m extremely hard to impress and if I compliment something past “great idea” its genuine…

The SBA is always an option but you will have to jump through some hoops to get funded. Even though you can certainly get money from them, they often lend money to start-ups that can show either a revenue stream or a very solid biz plan that can clearly demonstrate significant growth and profitability. That being said, I have not personally dealt with the SBA so I am no expert on how they handle inventors.

Jim BAD, BAD, ideal friends & family I dont think so unless they are well rounded with how investing in a product or business works, and can stand that type of money out of their hands for 6 months to a year.I would just point them to EN!For 20 to 25.00 bucks it will be a lot less of a fight trust me on this one.

Allison,
Thanks for your feed back. I think this is an other option. Maybe we can learn something by just looking into it a little further.

Jim,
Now that I decided not to patent, I have been thinking that The Shark Tank or program maybe something to look into. I had not done so because I thought that I needed to patent first, but now that I am not, I think an agel investor or this television program or the SBA can be better options than family or friends.
What do you think?
Gladys

I have been funded by the SBA with a loan and line of credit, as well as raised 150K from friends and family! When you have a great idea….the SBA, your friends and family, angels, etc….I have found that is not that hard to get what you need. Just get your ducks in a row and get to presenting to as many people as you can.

Just my $.02! LOL

Trent

Way to go Trent! This shows that if you have a good product idea and keep at it, most anything is possible!

Jim

Absolutely!!

Trent Rousey
www.3rproducts.com

Jim Hi,

have you heard of www.seedcapital.com?

Yes I have Joseph….one of my clients is a partner at this firm…..

With the economy the way it is, going to friends and family for investment funds may not be a very good strategy. If obtaining a loan from someone close to you is going to create a potential hardship, it can only lead to trouble (and possibly the end of a very good friendship.) On the other hand, if you have a wealthy aunt with money to burn, more power to you!

I’ve heard of some start-up entrepreneurs holding fund-raiser parties they invite all their friends and family to. They essentially pass around a hat and everyone kicks in however much they’d like… no strings attached.

In the early 90’s, I wanted to produce a video to sell on infomercials. (I was a television producer for many years before I had children). The picture on my profile is actually my daughter – not me. Anyway, if the idea is good, it isn’t very difficult to raise money. I called about a dozen of my friends and raised all of the money in about 1 hour. I just made sure that the % of returns were good for the investors. I’m happy to say that the video did very well and all of the investors not only made all of their money back, but they all made a profit. In retrospect, I, personally would have made much more money if I didn’t have the investors involved, but I couldn’t take the chance in the beginning in case it was a flop. You just never know if something is going to take off or not, and it is better not to put all of your money into an idea – no matter how good it seems. A very good friend of mine wrote a Broadway musical and wouldn’t let any of his family invest in it because he didn’t want them to lose their money. It turned out to be a goldmine for his outside investors, but none of his family was able to cash in on it. Still, he has no regrets, because he would have hated to see his family lose their savings. I’m sure that every situation is different, but it is a lot less scary to bring in outside investors who are completely aware of the risks involved than to worry about losing your family’s nest egg.

very interesting story Jaclyn! And what’s most interesting is the disparity of responses people are giving. Some have had bad experiences and others great ones. Some have been able to raise money without a lot of hardship and others could not raise a dime – and I am saying this not just on the posts here but in my experiences with working with inventors for so many years. The bottom line in my mind still remains this – inventors absolutely must become comfortable with learning how to raise money in whatever fashion if they are not capable of coming up with their own money or have failed at getting bank loans or other traditional ways. Angel investors respect those that are capable and willing to take risks and stand behind their idea while being able to raise money to develop a product and run a business. With the exception of licensing your idea to a company, without money your business will not go anywhere….and without money a product idea will usually remain just that – an idea.

jim

I guess I’m lucky because many of my friends are in the financial world and either have money to invest or know people who may want to invest in good business opportunities. Still, I think that anyone with a good idea can find people to back them. Of course, smart business people want a very good return on their money. And, they deserve it. It is a risk to invest in any start-up, and the money people are entitled to a fair payback. And, I agree that investors want to see that you are willing to put some of your own money in the project. I put up some of my own money into the video, as well. But, by bringing in investors, I didn’t have to take such a big risk. I also want to mention (which I wrote about in a different post somewhere) that my video didn’t really start to make big money until an outside company saw it on TV and approached me to take it over. In the beginning, I was doing everything myself…buying the air time, hiring the people to answer the phones, working with the credit card companies and handling shipping, etc. And, I was all new to this. I made many mistakes when it came to running commercials in areas of the country that weren’t paying off. When I turned it over to the outside company, they did everything and paid for everything and gave me (and my investors) a small royalty for every tape sold. That’s when the money started to roll in. If they didn’t get involved, I don’t know if I would have ever broken even. So, I am a firm believer that it is better to put your ideas into the hands of people who know what they are doing, even if your cut is smaller. That’s why I think this company, Edison Nation, is perfect for “idea people” like me and everyone else on this site. For a ridiculously small investment, $25, we all have the opportunity to turn ideas into realities. I think this is absolutely brilliant.

You can’t get any more obvious than my invention Handi-Straps and all the people I talked to about money simply put it on and saw for themselves.

Here’s what happened asking family and friends to get involved who just did not have the vision necessary to understand what I had or what I was doing. All of my family got an inheritance but me. It just worked out that way. I was excluded. I wanted a lousy loan from these people collectively for less than $5000. Me and my entire family were not on talking terms for 1 to 3 years after that and a fight that was a first. I also have been battling cancer for 22 years and that magnified my situation of need.

Then I lost my very best friend who really cared about me and put up some money. Very sad.

The problem was, NONE of these people ever took a crack in business so they just don’t understand. If I had people with business savvy things might have been different. My advice is to check if your family and friends can understand what is involved, possible risks and payoffs…or they just might not get it…MOST won’t.

As far as investors, which I have MUCH experience, the best thing to do is show AS MUCH solidity as you can in your venture. Maybe strategic contacts, serious potential buyers, a good alliance starting with a manufacturer, AN ALTERNATIVE SHOWN TO THE INVESTOR SHOWING THEY ARE NOT YOUR ONLY OPTION…SHOW STRENGTH.

This means do AS MUCH prep as you can. The more you have done in your venture the less risk for the investor which means better terms for you!

Angels typically want 50 to 70% even. If you are a well established company and need over 2 million you may seek a venture capitalist but they want to see you offer an IPO meaning eventually become a publicly traded company…BUT…since you are established you may only give up 20% or less with them.

When I first started with Handi-Straps all offers were for 50% of the profits. After I was established investors started offering for as low as 20%. Get the picture?

Jaclyn, can you say what your video is about, has it been on an infomercial?

It was called “The Secrets of Blackjack.” It was hosted by the world’s greatest blackjack player. It was sold during the 90’s via infomercials and then on QVC. In those days, I was unable to edit on my computer, so I spent a ton of money producing the video and commercials. Today, I would have been able to shoot and edit it for practically free. Also, it was on VHS which was more expensive to duplicate than DVDs are today. It still was very successful and everybody made money on it. Some made big money. Unfortunately, I only made a little. Live and learn.

Susan E. you get it… Thats what I was getting at, we must understand the trend of the universe, what works and timing oppOrtunity due to the conditions of the economy. This is something friends & family just wont ever understand and good for you Ron for taking the bull by the HORNS!!!

Before asking family or friends, understand that sometimes circumstances not apparent may keep them from loaning or investing. At one time we had 3 kids in college at the same time. On the outside it looks like we have it all together and money to burn. But, it was quite the opposite.

I just stumbled onto this site and was happy to read such positive info. I just invented a couple products and am determined to take it all the way. I am new to all this and can surely use some help. One product is currently being manufactured. If anyone has any marketing ideas would love to hear it ? I have looked into money4ideas.. Has anyone delt with them ?