Q: I have a patent pending on a new type of commercial resistance exercise machine. Here’s the problem: I don’t have the money to get a prototype built. I know what I have here, but I have no money to pay for anything. My desire is to start a small manufacturing company after the product has been tested in fitness centers. I could simply sell the rights to this for royalties, but starting a small manufacturing company (and surrounding myself with a lot of people who are experienced in the field, including management) is what I want to do as I believe that once this product becomes known it will catch on very quickly. What do you recommend for someone without any financial means to do anything?
A: I know you say that your desire is to have your own manufacturing capability, but I think that will be very difficult to achieve. Since you don’t have the funds to build the manufacturing capability (and I would not recommend that you did anyway since so much underutilized capacity already exists) and since this is a terrible market to try to raise funds, I would recommend that you attempt to license your idea to the larger, established fitness equipment companies.
I would recommend the following steps (for much more detail see How to Take an Invention to Market):
- Make a list of all of the large fitness equipment companies
- Research their contact information and attempt to get in touch with their new product development staff
- Tell them a little bit about your idea
- If they are interested in hearing more, have them sign a confidentiality agreement
- Negotiate a royalty agreement if they are interested, if not, move on to the next company
If your idea is not already patented or if the application has not already been submitted, at least have an inventor’s notebook completed with the dates, drawings and notes of your work on your idea to protect it.
- Non-Disclosure Agreement Template (a.k.a. NDA or Confidentiality Agreement)
- License and Royalty Agreement Template
- License and Royalty Agreement Kit (includes several agreements, a negotiating template, an NDA template, etc.)
Ask an Expert:
- Venture Academy (and in particular the Harvard Business School case study and video featuring Palm Computing and a licensing agreement put together with a software entrepreneur)