In the previous blog Situations and Solutions – Moving Forward, Part I, I described a couple of solutions or paths forward for a person with lots of ideas and no (or very little money).
Let’s consider a different scenario and potential solutions.
Situation: A Great Product, Some Sales, Obvious Benefits – No one wants to License!
Licensing transfers all costs of product development from you, the inventor, to a large company with vastly more resources who can manufacture it, package it, and distribute across a large network of retailers. Licensing is an attractive option for inventors.
But it is not easy and there is no guarantee that any company will take the risk and levy the capital to license your product. If you have presented your product to several promising companies with no takers, they may be metaphorically saying to you, show me the money!
In other words, they like your product (the potential) but don’t see clear evidence the reward (money) will be there for them if they take the risk and license it. So, how do you show them the money?
You must do what you are asking them to do: manufacture it and produce sales to show the reward justifies the risk.
The low risk way to do this is to crowd fund your product with a successful Kickstarter or Indiegogo campaign. There is good information on the key elements of a good campaign on both websites. If your campaign succeeds, you will have the capital necessary to produce commercial quantities of your product, to provide to your contributors and to sell to others as well.
A successful crowd funding campaign shows a potential licensee that your product resonates with consumers. Best of all, you have no capital, you are using other people’s money.
A higher risk alternative involves you directly risking your capital: selling your product on HSN or QVC. Both home shopping channels bring your innovative new product into the living rooms of millions of viewers (and thousands of buyers). You must be able to manufacture, package and supply a finished product in significant quantities to either HSN or QVC. Your product must have a wow factor and be easily demonstrated to succeed. I have sold on both HSN and QVC. They prove there is a market for your product.
When you show a potential licensee you have succeeded on HSN or QVC, it speaks volumes about the value of your product.