Funding a new product/business with grants?

May 9, 2011 6:50 PM

I'm patenting a product and looking into funding options. I have money coming in from the product, but attorney and patent fees are expensive. Other than a small business loan (in this economy?) are there other options? Thinking about grants, but I was always under the impression that it takes a long time to get the money if you win the grant. advice?
posted by secretsecret to law & government (7 answers total)

You could try to get an investor or investors.
posted by J. Wilson at 7:05 PM on May 9, 2011

kickstarter?
posted by rmd1023 at 7:46 PM on May 9, 2011

If you're selling the product already you may be too late to apply for a patent anyway. If you're selling prototypes and can make a good argument that the finished product that is to be the subject of the patent is a further refinement of your existing innovation, file a provisional patent application. Better still, hire a patent agent or a patent attorney to file it for you.

I know it's expensive, and this is one of the problems of bootstrapping a business out of an invention, but it's worth it. Is there work you can do to fund your business expenses?

I am assuming you are in the U.S., FWIW, and I'm not trying to dodge your question about where do you get finances. It's a tough lending climate right now, so good luck. At the same time, attorneys are getting cheaper as the bubble bursts, so it may not be as expensive as you think to get a patent attorney.
posted by gauche at 7:50 PM on May 9, 2011

You can file a provisional patent pretty inexpensively (filing fee is $110), and this will get you "patent pending" for one year from filing. Within that year you'll need to file for a full patent, but this will buy you time to get investors.

Are you bringing the product to market yourself, or are you planning on licensing? You may be able to get your licensee to pay for your patent.
posted by fzx101 at 8:42 PM on May 9, 2011

You might want to check out this alternative view on the usefulness of patents.

"For most individuals and small scale startups, patents are virtually certain to result in a net loss of time, energy, money, and sanity."

posted by Marky at 9:00 PM on May 9, 2011 [1 favorite]

A full-up patent process is going to cost you 5-10k. If you aren't making enough on the sale of the product, regardless of the timing issues, that this is insignificant, it's a hobby anyway. Why sweat it?

Also, 'grants'? Not many I have ever seen (and that's a bunch) are for projects in which you have a personal financial interest. Loans, however, might be a way to go. Something from a related party (i.e., family) is one way to go.

My late father-in-law had 200 US and international patents. Most of these came from his 3rd company, the first two having gone bankrupt. On his second company, he solicited investment from an uncle-in-law... I think about $5k. This was in the 1950's. Company went bust, the uncle lost his money. This particular uncle gets my nod as the single nicest man I ever met.... and yet, I could tell this was a sore point up until he died. If you do borrow money from a friend or family to fund this idea of yours, make sure you pay it back, success or failure. Good karma.

I should also mention, the single biggest invention I personally ever did made its owner literally scores of millions of dollars. (It was a 'work for hire', so I don't share in that, but I did make a few bucks from it!) The device had at least 6 major claims, but as a one man shop, he decided he would rather spend his money on marketing, and take his chances with competitors. Now, he owns 80% of his market. Execution beats the hell out of protection. YMMV.

FWIW, I'd go sell it. Ideas are cheap. Refine/hone/test your business skills and you will come up with other ideas you can afford to patent, once you learn how to make a buck.
posted by FauxScot at 4:48 AM on May 10, 2011

If you are planning to patent internationally your costs will be much, much higher for both filing fees and translation fees - $50K and up plus annual fees. At that point you need serious investment, a buyer or licensees. Do you have a business plan or at least a spreadsheet of the financials? That and an executive summary are the bare minimum to start looking for investment - think angels rather than venture money and start asking everyone you know if they have a rich uncle. This may sound facetious but high net worth individuals who get your idea and will stick with you can be a very viable way to bring a product to market.

Ask yourself - size of market? Potential profit? What is the route to payout for potential investors? This last is key - if someone is going to put money into your product what, how and when will they make their money back? Are you aiming for a steady revenue stream? For getting bought by a big company? IPOs aren't likely for a long time in this economy. A single patent can be a slippery slope to building a company!
posted by leslies at 5:54 AM on May 10, 2011