We got a letter from “Kellen,” who has invented something he thinks can change the world and make him a lot of money.
Kellen is currently a business owner and founder of a men’s fitness franchise. He said he had tried to be the “Curves for men,” but is finding out that “men don’t take to fitness like women do.”
He has developed an idea that he says “could revolutionize the auto industry” and “drastically affect the world’s reliance on oil.”
“It will kick off an industry so gigantic” he says, “that… well, I don’t want to get carried away… but can you say ‘Microsoft?’”
Kellen wants to know two things:
1. How can he find Venture Capitalists/Angels/Investors who would be interested in funding the research and development he needs to prove his idea works, and…
2. How can he protect/patent his idea to keep it safe from would-be thieves?
I’m not an expert on patents or venture capital. (I prefer businesses that can be started on a shoestring budget.) But I’ve learned a few things about them over the years that I can pass on.
But before I do that, I want to make a general point about inventions and inventors. What I’m about to say is no reflection on Kellen. It’s just a warning to anyone reading this who might harbor dreams about getting rich by inventing something.
The warning is this: Many are called, but few are chosen. Or, rather, few are called and almost no one is chosen.
The inventing game is a long-shot business. Most people who develop “amazing” ideas and try to patent and sell them find out that they have already been invented… or have been tried in the marketplace and failed. For a new product idea to be successful, it must pass three tests. It must be:
- New
- Unique
- Useful
So would-be inventors must stop and ask themselves: Is my idea really new, unique, and useful?
The “new” question can be answered by doing a little research. Either it is or it isn’t. But if it is new, that isn’t enough. It must be unique in some way. It must have some quality that differentiates it from other, similar ideas/devices. And that differentiating factor must be useful. It must be something people will be willing to pay for.
But even if your invention is new and unique and useful, its chances of getting produced and eventually making money are very slim. That’s because the marketplace you will want to bring it to is filled with businesses that don’t want your competition. They will do everything they can, including suing you and getting regulators after you, to get rid of you. Resisting them will take time, money, and tenacity.
So that is the most important thing Kellen needs to understand – the difficulty of the job ahead of him. The odds of making a fortune through an invention are about the same as becoming a movie star or sports hero. Possible, but highly unlikely even if you’ve got the goods.
That said, let’s answer Kellen’s two specific questions:
1. How can he find Venture Capitalists/Angels/Investors who would be interested in funding the research and development he needs to prove his idea works?
Silicon Valley and Wall Street immediately come to mind. But you can find money lenders and investors all over the place. An Internet search for “venture capital” or “angel investors” will yield several directories.
Charles Delvalle – a market analyst for ETR’s sister site, Investor’s Daily Edge – recommends the National Venture Capital Association (nvca.org). Charles also tells me that “green” industries, like alternative fuels and energy, are a current hotspot attracting VC investment. From the few details Kellen gave me about his business, it sounds like this might help his case.
Andrew Gordon, ETR’s Investment Director, adds these sources for finding venture capital: the U.S. Small Business Administration, your local Chamber of Commerce, local business incubator programs (which could be part of a local university or city/county/state economic agency), and your state government’s economic development department.
Just like any investor, venture capitalists want to see a return on their investment. So Kellen will have to show them proof that his new technology really works. They’ll also want to see that his invention or idea has a market of customers ready to buy. None of this can come from his word alone. He must provide detailed specs and-up-to-date market data. Also, he needs to show that he and/or his partners have the experience to run a business. In short, before he even starts to look for investors, he needs a cogent business proposal.
2. How can he protect/patent his idea to keep it safe from would-be thieves?
You can’t patent an idea or theory, however unique. What Kellen needs is some sort of specific process, technique, or device (or at least workable plans) that aim to do the job his invention is meant to do. Even then, there is no guarantee that his patent request will be granted. There are some pretty tough standards that have to be met.
If approved, enforcement will be Kellen’s responsibility, not that of the patent office. If he believes another company or individual is infringing on his patent, the only way he will be able to stop them is by asking them to cease and desist or suing them in federal court.
The U.S. Patent and Trademark Office handles patent applications. They will be able to answer any questions ETR readers have about the process, including how to apply and the application requirements. If you’re interested, check out their website for more information: uspto.gov.
[Ed. Note: As Michael points out, becoming an inventor is like waiting for lightning to strike. But you don't need to invent a brand-new product to build a multimillion-dollar business. Discover how you could be making an extra $1.2 million next year...]
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