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Inventor's Handbook

Chapter 11:
How Do I Raise Capital?

Perhaps one of the greatest challenges in the entire invention process is raising capital. It's impossible to cover this topic comprehensively in a brochure. We offer a few tips—the first of which is to research the subject thoroughly.

As an entrepreneurial inventor, it's best to have several money-raising strategies. A joint venture—with an individual, group or firm with a vested interest in your product—is one option. You provide the invention and a mix of manufacturing, marketing, management, and distribution know-how, and your partner provides a service free of charge in exchange for profits. To find partners or potential investors, consider running an ad in a newspaper, such as The Wall Street Journal—or contact investors organizations, which offer material support of all sorts. Banks and other traditional lenders also may be willing to finance your enterprise, especially after you've achieved a track record.

Another excellent source of start-up funding is venture capital, gained through individual investors, financial institutions or venture capital funds. Financial agents, who work for a finder's fee plus reimbursement of out-of-pocket expenses, may be able to connect you to venture capital. As with invention promoters, check out your potential investors thoroughly.

Local, state and federal government programs that provide businesses with financial assistance are another avenue to consider. Federally funded Small Business Innovation Research Programs and the Small Business Administration (the single largest government agency mandated to make business loans) are valuable sources of funding and information.


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