I've invented and patented several products that are clever, useful, and saleable. Wal-Mart even gave one of them their highest grade when I sent them the plans through their little-known, inventors program. So why aren't I rich? That's a reasonable question. Once I got over the elation I experienced upon receiving their acceptance letter, reality sunk in. They wanted 20,000 units in special packaging and designed to meet certain specifications. After consulting foreign manufacturers and getting prices for construction and exporting, I looked at my investment costs. They totaled over 0,000. I had no way of raising that much money, so I began exploring other avenues of funding. The banks looked at the Wal-Mart proposal and still turned me down. They recommended I look for an 'Angel,' or venture capitalist investor. These people fund likely candidates that have products they deem marketable. After contacting a few in my area, one agreed to meet with me.
I had my proposal ready, including a business plan, the Wal-Mart response, and an entire five-year projection complete with marketing materials. The three men were impressed and explained how they work. If they decided to front me the money needed, they would expect the following: (a) total control over the project, (b) the right to approve and change any idea I proposed, (c) their company name on every piece of literature, (d) 70% interest in the business, including any future stock offerings. Needless to say, I was somewhat speechless.
Invent
The thought that my invention would be under someone else's ownership and I would receive a 30% return on all my hard work, was disheartening, to say the least. But they explained the reasoning. They were taking all the financial risk in an un-proven product that might not sell at all, regardless of what Wal-Mart said. Therefore, they had to be assured of a good return on their investment, if it did succeed. They told me they did like the product and the idea and would make their decision within a week.
During that time period, I thought about my hopes, dreams and how they were souring. When I eventually got the call, I had mixed feelings. They said they were still interested and would probably go with the program, after consulting their investors. I decided that getting 30% of something was better than 100% of nothing.
It turned out that it didn't really matter. I never heard from them again. Over the following months, I was to discover how few of these projects get off the ground because of similar funding issues. I was also distraught after spending two years of my life designing the product and making a working prototype. I had gone to the trouble of test marketing using random people in my area and getting their feedback. All of them agreed it was a great idea and yet, where was I years later? I was no closer to getting it into the stores. Without the money I needed, I might have well not done anything at all.
I had everything necessary for an invention to succeed: the working product, a business plan, packaging, manufacturing, a marketing program, and a willing merchant. And not just any merchant: Wal-Mart. Yet, no one was willing to finance my product, or, if they were, they wanted 70% ownership and total control. This is a rude awakening to all you would-be Edisons out there. Even if you have a terrific invention, will you automatically make a fortune? The hard reality is that the odds are against it. Myth busted!
Mythbusters: Invent Something Everyone Needs and You'll Make a Fortune
Jeffrey Hauser’s latest book is, "Inside the Yellow Pages,” which can be viewed at http://www.poweradbook.com
He was a sales consultant for the Bell System Yellow Pages for nearly 25 years. He graduated from Pratt Institute with a BFA in Advertising and has a Master's Degree in teaching. He had his own advertising agency in Scottsdale, Arizona and ran a consulting and design firm, ABC Advertising. Currently, he is the Marketing Director for thenurseschoice.com, a Health Information and Doctor Referral site.