Invention Funding

Public Funds for Commercialization of Inventions

$2 million. 
Size of the “The University of Texas System's newly-created $2 million [Texas Ignition Fund] is meant to facilitate the commercialization of technologies or products developed within the UT System.  [The goal of the commercialization grants are to] speed the commercialization process and, over time, produce significant contributions to the Texas economy and society.  …[As of April 2008 the fund had] granted a total of $465,000 to 14 inventions that have the potential to become commercialized.  … Each grant recipient was awarded grants ranging from $10,000 to $50,000. The funds can be used for personnel, equipment, supplies, business plans, and in limited instances, faculty support and patent costs.  Among the winning inventions was a tiny chip that could be implanted in humans and diagnose acid reflux. Another grant recipient involved an advanced process for extracting lipids from algae to produce cheaper biofuels.” (“Texas Ignition Fund sparks 14 inventions,”Austin Business Journal, Wednesday, April 9, 2008)

Private Sector Funding Structures

25% to 33%.  Range recommended for percentage of profits to be shared by inventor with funding backer.  “[Y]ou might want to give some thought to getting a backer.  Not a partner, a backer.  In exchange for funding the legal and miscellaneous costs, the backer receives a portion of the net profits.  The angel is not a partner — it’s your invention, and you call the shots.  The percentage for the backer [of an invention] is negotiable.  If I were doing it, I’d offer my backer 25 percent, and I’d be willing to go up to a third.  That’s purely subjective, and your input is as valid as mine.  The backer would be investing in you the same way an angel invests in a Broadway show.” (Harvey Reese, "How to License Your Million Dollar Idea," Second Edition, John Wiley & Sons, Inc., New York, 2002, p. 77)

Where Private Start-up Funds Come From...

85%.  Estimated percent of private start-up funds coming from business owner connections or referrals.  “Approximately 85 percent of private start-up funding comes from people either connected to or referred to the business’s owner.  Money is crucial to business — everyone knows that.  Ask anyone and everyone for money and contacts.  Go to churches, charity events, organizational meetings, country clubs, golf courses, schools, and conferences — in other words, go anywhere people gather — and you may find someone to talk to about funding opportunities.  Tell people about your product and your company and ask if they know of anyone who may invest.  (And always have a copy of your business plan available to pass along.)” (Pamela Riddle Bird, PhD, Founder and CEO of Innovative Product Technologies, Inc. and author of “Inventing for Dummies,” Wiley Publishing, Inc., 2004, p. 183)