Let’s discuss how to pitch an idea to a company and how to sell ideas for money. Everybody is not perfect in doing everything. So, if you are an inventor and don’t like to build a business from scratch, then sell ideas to bigger corporates.
To execute an idea successfully, you need to have lots of skills like finding & managing a team, communications and finding proper resources etc.
If you don’t like to spend time on all these business process hassles and are limited by financial resources, then selling ideas will be a perfect fit for your needs.
Ideas are theoretical solutions for a problem that needs to be solved either by a full solution or by a prototype. Inventions are extended forms of an idea and that can be a prototype or an intermediate solution. Inventions are eligible for patents also.
Is it possible to sell ideas to corporates?
Why should they take ideas from you? The answer to this should be clear if you are planning for a product pitch. In these competitive times, all business houses are continuously reinventing their products to provide additional value to the customers and excel in the competition.
So most of the corporate businesses will be open to licensing new inventions If it provides additional value to their customers.
Most businesses are very sensitive about their competition taking away a good idea from them. If the idea you are pitching is a perfect fit for their business, then they wouldn’t be able to resist it.
Mostly corporates would be ready to license your inventions as they know the market value of great inventions that are executed much before their competition. They also understand the time it takes to reverse engineer the prototype of any given invention.
Sometimes people may try to steal your invention but it totally depends upon your prospective list and precautions taken by you. We will discuss later about the precautions that can be taken to avoid such unfortunate circumstances.
How to prepare for selling invention ideas?
Before preparation, you have to collect more insights about your market and ideal personas. This research is just to know your market size and whether your product concisely addresses the pain points of your target audience.
As part of this market evaluation, you can test your prototype with the people around you. Put all your studies in document form and it will help you in later stages.
Now it is time to prepare a professional presentation to convince the viability of your invention/idea to the corporates and early-stage investors. The sections you need to have in your presentation documents are an introduction, about the market, major challenges, solutions, competitive edge and the legal status.
In the introduction section, you should describe your invention/idea and its objectives. Another import detail you have to fill out in these sections are about yourself and how you are related to the particular business industry.
In the ‘About the market’ section, mention the market size, customer buying cycles, flexibility of the market and growth potential of the target audience. Further, give details about the market competition, challenges, competitive edge and solution.
In ‘competitive edge’, describe how your proposed invention/idea will make the company reach far beyond the competitors. In ‘legal status’, you have to state the legal status like is it patented, trademarked or copyrighted etc. This is an important section for selling ideas.
Create a list of companies for selling invention ideas
Create a detailed list of companies, to whom you could sell an idea based on the following criteria. The criteria you should first consider is the size of the company.
In this case, size does matter, chances are high to fail your invention idea on the market if it is poorly executed.
Include companies which are already catering to the needs of your future target audience. If your product ideas are for a particular geographical area, then you should consider the companies which are serving the same locations.
Before putting a company on your list check their company policies and credibility on the market. For some companies, their policies may not allow them to take ideas from outside. Company policies are not important criteria if your invention ideas are a perfect fit for their business, in which case they will find out some loopholes to consider you.
But you have to collect the details of the market credibility and track record of each company on your list before approaching them to sell an invention idea.
You have to give most priority to the companies which you know personally and try to establish a personal contact with the decision maker of each company on your list. These personal contacts will help you to find out their exact pain points and nail it.
How to sell an idea to a company without them stealing it?
Before approaching business houses, you have to make sure that the invention ideas are protected properly and here we will discuss how to sell an idea to a company without them stealing it.
First of all, find out the exact decision maker of the company and discuss the details of your ideas only with him/her. This method will also help to avoid unnecessary lags.
Don’t discuss everything with everybody. You have to reveal necessary things in the initial meeting and if they are interested, then go for an NDA. After signing the Non-disclosure Agreement, you can let the cat out of the bag.
Another step is just putting everything on a document in the form of writing and graphics, and then going for a copyright. This method is most appropriate if your invention/ideas are connected with their manufacturing system.
In the initial stages, applying for a patent is not practical because it will cost a lot of money and time for you. So, apply for a provisional patent and it will give you protection for 12 months.
How to make money by selling ideas?
This is one of the hardest parts of this process and for the successful completion of this process; you have to master some business negotiation techniques. You can read more about negotiation techniques here. Business negotiation techniques
Usually, there are three methods to get paid by selling invention ideas and they are the flat fee, royalties and advance against royalties.
The flat fee – In this method, you will get paid a fixed amount as annual fee irrespective of the sales of your products on the market.
Royalties – Royalties are common payment methods and here you will get paid a certain percentage of the wholesale price of the product (usually the percentage will be 2% to 8%).
Advance against royalties – In this method, you will get a fixed amount in the beginning as upfront payment and remaining as royalties. The upfront payment is like an advance against the royalties and the company will deduct the initial advance from the total royalty amount.
Advance against royalty is one of the most suggested payment models as it creates a win-win situation. In this mode of payment, you can ensure that the company will put necessary efforts to push your product on the market.
So, we hope that the above-mentioned methods will help you in successfully selling ideas to companies. Some methods may work for you and some may not.
So what other methods should inventors follow for selling ideas? Just leave a comment below with some of the methods you know.