When you are designing a medical technology product, business acumen is likely not on your mind. But think again. Calculating basic financials and strategizing ways to sell and/or fund your invention is an important first step in ensuring that you are making sustainable business decisions — especially if you are debating whether or not you want to take on your inventor role full time. If your idea still looks financially viable after some basic calculating, it may actually warrant the investment of your time and money.
Traditional pathways to funding your invention, are, in a lot of ways, something of the past. In a 2013 survey by the Advanced Medical Technology Association (AdvaMed), a trade association that benefits medical technology firms, 75 percent of its survey respondents, which were composed of the association’s partner companies, said they had “deferred or cancelled capital investments,” “reduced investment in start-up companies,” and “found it more difficult to raise capital among start-companies.”
The recent drop in investment funds is especially harmful to medical device startups that are still a couple of years away from getting their products on the market. So what are an inventor’s alternative options to outside funding? For those who have a great idea but don’t want to dedicate all of their time to building a business, there are options for immediate payoffs and long-term, steady income — all without the full-time commitment to becoming an entrepreneur. While these are not your only options if you wish to make money from your idea, each is important, as they don’t require a huge time or money commitment.
1. Immediate Payout
The easiest and fastest way to make money from your idea is through selling off your rights. Opting for this route results in a quick and definite payoff, which is generally not guaranteed. In order to properly sign away your rights, inventors need to have some form of intellectual property protection, preferably a patent. Without legal protection, you will be at risk for someone simply swiping your idea as you are shopping the concept around.
2. Long-Term Payout
When you choose to license an invention, you are assigning ownership of their idea to another party in exchange for earning royalty payments, normally ranging from 2-8 percent of the product price. In this scenario, a licensee will agree to annual volume minimums, geographic exclusivity, and a specific royalty percentage, resulting in a permanent cut of the sales instead of just a single check.
3. Establish a Long-Term Relationship
If you are a full-time medical professional and have a strong desire to stay involved in the decision-making process, there are ways to stay involved without a significant time commitment. Seeking an advisory role, for instance, will help an inventor have influence over important sales and marketing issues without getting too bogged down with details
4. Sell the Product
Opting to sell your product yourself means that all profits go straight into your pockets. But the downsides may outweigh the one, big benefit. Any money you make will most likely get eaten up by overhead costs, such as legal and accounting fees, business start-up costs and the actual cost of producing, marketing, and selling the product. This option also requires an inventor to be business savvy and nuanced in navigating the startup community.
Ultimately, there will be many factors that determine the success or failure of your pitch — many of which are impossible to control — but you can, and should, take charge of your invention’s messaging, whether in the form of a condensed elevator pitch or in your product’s sales collateral. For more information and resources, the American Society of Inventors, the Inventor’s Handbook from MIT’s Invention Dimension, and the National Society of Inventors can serve as useful guides.
Source: Medical Design Technology