Millions from the Mind

Alan R. Tripp

Reality in Raising Money

Most successful inventors land somewhere between the Charles Muench style and the Bob Bennett style of financing. And most of the time, it's a step by step process.

People who back innovation development are like patrons who invest in sculpture. They like to see what they're getting for their money. But there's a paradox: the inventor's vision is always a step ahead of the investor's.

Michelangelo once said that the figure already existed within the block of granite--he could see it in his mind and all he had to do was release it. But when he delivered to his patron, the Duke, a granite block with a half-emerged figure, the Duke saw red and threatened grave consequences unless Michelangelo promptly released the rest of the figure from the stone.

The first and the last reality in raising money to commercialize inventions is this: what people with money want, with rare exception, is to make more money--with the least risk possible. If they were out to save mankind, they'd give money to the United Way, the Red Cross or their favorite charity. If they had a yen for a seat on a Board, they'd pick on a going company and buy five or ten percent of the stock. If they wanted safety, they'd buy Treasury Bonds. And on through long lists of alternatives. But you'll seldom find "investing in inventions" on anybody's financial wish list.

So it's always necessary to build a bridge between the vision of the inventor/entrepreneur and those who are sitting on the cash--a bridge that must translate technology into cash flow.

Plainly, the need for imagination diminishes geometrically as the invention advances from an idea toward a running business. Thus, the potential investor who says "no" to the paper statement of the idea may say "yes" to a crude prototype. If the crude prototype still brings a "no", a polished prototype or a short run of manufactured product may elicit a "yes." Patent filings, claim allowances or issued patents add value to the invention. Independent tests testifying to your product's superiority tilt the table your way. Add to this tests that show consumer or trade preference and investor interest climbs. If you can actually produce the product and put it into a sales test, get real orders and make your initial deliveries--it becomes much easier to attract not only investors but those who would acquire the new product outright or acquire your company. Incidentally, a parallel progression exists for new product people fighting for budget allocation within a corporation: the closer the product is to market readiness, the easier it is to get it funded.

To "package" an invention as a money-making opportunity, rather than a deep well for endless R&D costs and market-entry investments, requires a special kind of business plan.

Such a plan must not only cover all the bases of a plan for an on-going company, it must also spell out in believable detail how you expect to cross each of the five bridges and what it will cost.

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