Invention Funding: How Inventors Raise Money

How to Get Loans, Grants, Scholarships, and Investors

Hands by piles of coins, close-up
Daniel Allan/ Taxi/ Getty Images

Before you get to market and sell your new invention, you'll likely need to raise some capital in order to fund the production, packaging, storage, shipment, and marketing costs for your product, which you can do through a variety of means including acquiring investors, taking out business loans, or applying to governmental and grant programs. 

Although you can make a personal investment on your own invention, it's often difficult to earn enough money to get a product off the ground—especially since most people find it hard to even cover base living expenses—so it's imperative that you are able to seek financial help from investors, loans, grants, and governmental innovation programs.

New inventors hoping to acquire lucrative business partnerships should always conduct themselves in an appropriate businesslike manner—an e-mail inquiry asking for financial support penned in an informal manner (full of grammar and spelling errors, etc.) will likely yield no response, but a professional e-mail, letter, or phone call will likely at least get a response.

For more help getting your invention off the ground, you could also join a local inventors group to learn from those in your area who have already successfully created, marketed, and sold their own inventions—after raising money, finding backers, and getting a patent themselves.

Find Grants, Loans, and Government Programs

Many branches of the government give grants and loans to fund research and the development of inventions; however, these grants are often very specific as to what type of funding is given and what inventions can apply for federal aid.

For example, the U.S. Department of Energy offers grants for the development of inventions that benefit the environment or can save energy while the U.S. Department of Small Business offers small business loans to get new companies off the ground. In either case, getting a grant or loan will require footwork, research, and a lengthy application process on your part.

Additionally, you could apply for several student innovation programs and competitions where students can win prizes or a scholarship to pursue their inventions. There is even special Canadian invention funding available, which provides research money, grants, awards, venture capital, support groups, and Canadian government patent offices specifically geared toward Canadian citizens (and residents).

Find an Investor: Venture Capital and Angel Investors

Venture capital or VC is funding invested, or available for investment, in an enterprise such as bringing an invention that can be profitable (along with the possibility of loss) to an investor and the marketplace. Traditionally, venture capital is part of the second or third stage of financing for a business startup, which starts with the entrepreneur (inventor) putting their own available funding into a shoestring operation.

Becoming an entrepreneur is quite an undertaking as you'll need to manufacture, market, advertise and distribute your own invention or intellectual property. During the initial stage of financing, you'll need to draft a business plan and invest your own capital into the product, then pitch your idea to the venture capitalists or angel investors who might want to invest.

An angel investor or venture capitalist may be convinced to contribute funding. Generally, an angel investor is someone with spare funds that have some personal (family) or industry-related interest. Angel investors are sometimes said to invest emotional money, while venture capitalists are said to invest logical money—both are willing to help give the new enterprise a more solid footing.

Once you secure financing, you will likely have to report back to these investors throughout the fiscal quarter and year to update your backers on how well their investment is doing. Although most small businesses are expected to lose money in the first one to five years, you'll want to remain professional and positive (and realistic) about your earnings projections to keep your investors happy.

mla apa chicago
Your Citation
Bellis, Mary. "Invention Funding: How Inventors Raise Money." ThoughtCo, Feb. 16, 2021, Bellis, Mary. (2021, February 16). Invention Funding: How Inventors Raise Money. Retrieved from Bellis, Mary. "Invention Funding: How Inventors Raise Money." ThoughtCo. (accessed March 25, 2023).