I've invented. How much should business partner have?

Garold said:
This would seem pretty important at this time because any value that you may attach to your invention is only available to you if you have the IP sorted out and tightly protected and in your control.
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The value of something which works goes far beyond a theorectical bit of IP which is patented. If you have a patent which stops the competition from doing the same thing or something similar to you, so much the better. But just something which is too complex to emulate does not need to rely on patents for protection.

If you do have a good patent attorney, I think that they should be able to give you some advice on the options for a commercial agreement with your business partners, be they investors, licensees, or manufacturers etc.
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Good patent attorneys cost big money. And are generally poor advisors for business partners and how to find licensees, manufacturers etc. You can easily burn through 10K for a basic patent and basic advice and far more for anything complex or for an attorney who really understands you invention and how best to protect it.

I believe that the agreement you would make with a well resourced professional investor would perhaps be different from one you make with some one who is investing 'a couple of grand'.
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Certainly - and the first thing they will ask for is some one experienced for the CEO role and secondly for a working prototype.

Just for info, the lawyers fees for drafting the agreement with our professional investor cost nearly 50K euros.

She also spends a lot of time finding the gaps in competitor's patents and their claims and working round them, so you can never be sure that IP can insulate you from the big boys if they want to move in to your business area.
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Patents are one form of IP protection. Copyright, secrecy and difficulty to copy are others.
 
michaelchapman said:
The value of something which works goes far beyond a theorectical bit of IP which is patented. If you have a patent which stops the competition from doing the same thing or something similar to you, so much the better. But just something which is too complex to emulate does not need to rely on patents for protection.



Good patent attorneys cost big money. And are generally poor advisors for business partners and how to find licensees, manufacturers etc. You can easily burn through 10K for a basic patent and basic advice and far more for anything complex or for an attorney who really understands you invention and how best to protect it.



Certainly - and the first thing they will ask for is some one experienced for the CEO role and secondly for a working prototype.

Just for info, the lawyers fees for drafting the agreement with our professional investor cost nearly 50K euros.



Patents are one form of IP protection. Copyright, secrecy and difficulty to copy are others.
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Can't disagree with any of that.

But I didn't think that I did.

However, I think that it's worth reiterating (as I mentioned before and you repeated) that patent attorneys vary in what they offer.

There are some that have extensive experience of licensing, profit/revenue sharing agreements etc. And then there are others who spend their days drafting over-technical lists of claims which are not commercially beneficial or relevant.

And then, when it's all done, you can't be too sure that it will insulate you from the attention of the predators anyway.

Just saying.

Garold
 
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Garold said:
Can't disagree with any of that.

But I didn't think that I did.

However, I think that it's worth reiterating (as I mentioned before and you repeated) that patent attorneys vary in what they offer.

There are some of that have expensive experience of licensing, profit/revenue sharing agreements etc. And then there are others who spend their days drafting over-technical lists of claims which are not commercially beneficial or relevant.

And then, when it's all done, you can't be too sure that it will insulate you from the attention of the predators anyway.

Just saying.

Garold
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I did not say you said anything different!

However, OP's problem is that he cannot afford any of that. So he has to find some one to help him with a small amount of cash before going anywhere.

He has some one who is prepared to help. However, I would warn that he should be very very careful of giving away a significant part of his invention/company to some one who might not be fully motivated in the long term, nor particularly competent.

If the guy really believes that the invention is a sure fire winner and there is lots of money to be made, then that guy should be confident in receiving IOUs and a dribble of stock options over time. If what he is saying is true, those IOUs are going to be worth what is written on them. Hence the idea to reward the guy well with promises - i.e. you return his promises to you back to him.

If he does not want the IOUs (i.e. promises from your company to him) then I would be very suspicious in his ability to keep his promises to you.

NB the IOUs must be on the company not from you personally. If things don't work out, you do not want to risk being personally bankrupt (that is why you must create a limited company).
 
There are a large number of very good points made in this thread, some of them inevitably totally contradictory! Your options range from on the one hand doing the whole thing yourself and earning all of the rewards, to the other extreme of selling the idea to a manufacturer for a percentage of the revenue. The best option probably lies somewhere in between those two extremes.

It seems to me that you need to find someone to help you get your thoughts about the best route forward organised - ie you need a business plan of some sort. It won't be right, but will at least give you a rough guide about which route to follow. It will also enable you to have a basis on which to negotiate with this potential business partner, or to raise the initial funding which you need. The most important part of that will be an honest assessment of the value of the marketplace – as has been noted above, the boating market may seem to those looking in from outside to be full of money, but the reality is quite different.

Ideally you might be able to get a friend to help you with this exercise, but in the absence of that someone who has the experience will probably want to be paid, either immediately or in some sort of share of the action - what is known as “sweat equity”. Depending on where you’re based, you may be able to get of assistance from a local enterprise partnership, and there are a number of websites which gives a lot of assistance to new ventures, such has Smarta. Another approach would be to try and get match funded professional advice using the Government Growth Voucher scheme; the trouble with that type of scheme is that you have to be able to pay for 50% yourself.

Happy to have a conversation with you; please drop me an e-mail if that is appropriate.

Whatever you decide, the best of luck!

As this is my first action on this website, apologies if I've got anything wrong!:p
 
snooks said:
Am I the only one thinking "alarm bells"?
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No Graham, you are not. The OP might be in danger of befriending a businessman who he grows to like and trust, but who does not know enough about the market for the product.

In my experience, its the 5% you don't know that stops any success.
 
Having read the thread my heart is heavy for the OP as a shearling in the midst of a wolf-pack. (Not that the contributors are in any way raptors).
On his own admission he's no businessman only an inventor.

His query as to the composition of a company is far too premature to be considered. And the likelihood of getting a DTI grant negligible

First he needs a business-plan -
the market, it's size, how to access it, competitors and their reaction, development, costings, cash-flow for the first 3 years, etc. etc
By his own admission he is strapped for cash, right now, so his only feasible approach is to take the working prototype and some projected numbers along to a company with a presence in his projected market and hope they'll give him fair piece of the action.
Until he can quantify everything just has a bright, worthless idea.
Without the business plan, speed and a working prototype he has no chance - right now an Oriental firm is looking at his application and lifting the ideas for themselves to get round the patent.
Other factors are all strong contra-indications - the grab for the rights - the lack of time or inputs - the dislike of the potential partner.

For 12 years I ran a management consultancy doing just that for SME's. But I sold that out 14 years ago and I believe things are now tougher. It was my experience that inventors overvalued their ideas, their contribution and their share of the business.
 
charles_reed said:
Having read the thread my heart is heavy for the OP as a shearling in the midst of a wolf-pack. (Not that the contributors are in any way raptors).
On his own admission he's no businessman only an inventor.

His query as to the composition of a company is far too premature to be considered. And the likelihood of getting a DTI grant negligible

First he needs a business-plan -
the market, it's size, how to access it, competitors and their reaction, development, costings, cash-flow for the first 3 years, etc. etc
By his own admission he is strapped for cash, right now, so his only feasible approach is to take the working prototype and some projected numbers along to a company with a presence in his projected market and hope they'll give him fair piece of the action.
Until he can quantify everything just has a bright, worthless idea.
Without the business plan, speed and a working prototype he has no chance - right now an Oriental firm is looking at his application and lifting the ideas for themselves to get round the patent.
Other factors are all strong contra-indications - the grab for the rights - the lack of time or inputs - the dislike of the potential partner.

For 12 years I ran a management consultancy doing just that for SME's. But I sold that out 14 years ago and I believe things are now tougher. It was my experience that inventors overvalued their ideas, their contribution and their share of the business.
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OP - What Charles writes is very true.
 
Great advice thank you.

Alarm bells and sirens have been ringing since I drove away from the chap's house.

It was those bells that led me here.

Prototypes up and working. pennies to make RRP £7

No competitors. Totally novel hence the win at the NEC.

Most households would want one. Wish I had some manufactured for the NEC - everyone wanted to buy one. But as a very non-business person (and non-risk taker when it comes to money - even if I love risk taking with extreme sports - or used to) I did not take the risk and have products made. I could have made a killing within a week.

Heck people on here said budget £2k for the stand and I did the whole stand for £200 and it looked good - damn hard work though. I didn't win gadget of the show, but an artificial pancrea did - fair enough I say.

I came behind them out of the lucky 20 shortlisted from the whole of the UK.


I am not happy that the chap has not stuck to his plan; by June he was supposed to have set up the Ltd company, allocated a number of shares for investors, and have been pitching the product (with his suit, Range Rover and business expertise in tow).

I now have to write a very delicate email stating that I will go with his initial idea of my wife and I being the directors and he takes a share of the money (he can still have 50%), but I will take the advice here and ensure there are milestones that he must reach in order to keep the project on line.

I told him by November I wanted a large investor in place to finish the patent applications (a few countries will need to be covered, so a large amount of money required - and that needs to be done withing the 12 months since priority date).

He has been complacent.

It was not until a few days ago when he saw my super smart prototype (even though I hand built it) and also the other products that can lead from it that his eyeballs popped out. He even asked if he could have one for his elderly mother to use !

He initially wanted in because my stall at NEC had so much attention and everyone was drooling over the product and saying what a genius I was and offering investment. He stated that his pension is now weak and his house will become his pension, and that by making a success of this product will solve his problems.

He has a track record of delivering innovative products to market, but he has not delivered here. His initial integrity has diminished in my eyes.

He will either take on board what I will ask him and start to work his socks off or I will be seeking a different business partner and going through all the business cards I collected at the NEC.

But a London chap that said "my uncles are all millionaires running their restaurants - we will invest, come and talk with us" did not sound like that had the infrastructure to take a product to market.

My chap sounded like he did, but is failing.

Many many thanks for so much advice. A lot to wade through and think about, but it has really perked me up and got me going - trouble is, all I REALLY want to do is give it to some business person and say "give me some money once you have dealt with it" whilst I tinker with my new dyneema rope idea, my new LED idea etc etc.

Of course I am not that bad and I will be working my nuts off to find the right partner for this current product that will fund all future products (and a lot of them there are too).
 
Sailingsaves, there are two types of people out there at the moment for you to consider. One is type you have been talking too, this is the sweat equity type with expertise and a little cash to invest in the business. The other is the wealthy investor, who may have been an entrepreneur in the past that has significant money to invest but no time apart from the board meetings for strategic advice/contacts etc (generally termed angel investors).

If you go the second route angel investor then you would need to get enough money to afford to hire the person you require with business expertise, get your patent legals sorted, inititial production run and some marketing.

I once did some work in Wales with a startup and the angel investor there was Welsh (circa 300mill squids in the bank) and just wanted to support Welsh entrepreneurs. 25K to 50K investment each times was money that if he lost the lot did not bother him at all.

So the restaurent people maybe cash rich time poor, but if the amount of cash is right (50K+) and the deal is right then time poor does not matter. You could even use there restaurents for product displays and free trials.

The benefit of cold hard cash instead of sweat equity is it certainty, it is in your bank account so you can go forward and you know where you are. With sweat equity you never know if the bloke is going to deliver, then it may be too late.
 
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>At first meeting, he said we should set up a Ltd company, my wife and I as directors, and he would take say 50% of the money.

No way give him 50%, I'd' suggest 25% it's your patent not his and anyone with 27% of a company can stop you selling it. He is also unproven in your company and you may not get on in a business environment. Definitely a Limited company and draw up a business plan: How will the product be sold, direct or retail, projected sales, sales price per unit, sales price if sold via retailers, capital needed to start the company and support it until profitable, how many people will you need to employ, which needs a sales forecast for the first year, cost of Web site etc. Also how will you raise the money if you don't have the capital. Crowd funding is the cheapest way. I've started two companies (now sold) so if you want to PM with any questions please do.
 
Did you tell the businessman you were planning to give 50% to know about your idea before you filed your patent application? If so, you have a 'prior art' problem in the future.
 
49% if he puts in the all the money 'if my past multi billionaire boss was anyone to reference by.

If tho you still need money, you may find as the inventor 10 years down the line that someone else owns 100% and you get paid a salary from it. I think Pixar was a but like that. Steve Jobs
 
I haven't read every response so apologies if someone has said this.

Unless you want the kudos of running your own company and having MD or CEO on your business card and the hard work of setting up sales and marketing, suppliers, manufacturing agreement, distribution, logistics, legal, IT, HR and all the other **** that goes with running a business I would seriously consider licensing it to one of the existing players in the market. They already have all that expertise in those fields and it would save a lot of time and heartache.

As to how much to give to a business partner this guy had the same problem and you might get some ideas listening to him: http://hearstartup.com/

You can either listen to him on the web or subscribe to a podcast site by scrolling down.
 
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