We’ve mentioned in some of our previous literature that when an invention is approved to receive backing from the funds family, we cap the total amount we are willing to invest in any one invention at $75,000. The purpose of this article is to offer a little more information on WHY we specifically set that as our limit.
Most inventors have 2 options:
- The first is the traditional startup like you see on Shark Tank
- The second option is licensing which has a much greater chance of success but too many inventors aren’t directed that way until they have wasted too much money.
You may be wondering why we limit ourselves to that specific amount as an investment cap. There are several reasons. It takes right around $75,000 to tee an idea up through patenting, designing and testing to get the product ready for Licensing. Licensing is what most inventors are shooting for even if they don’t know that when they start. Licensing means another company is going to make it, sell it and send us a royalty check. In essence, the licensee is “renting” the right to use the patent.
After many years of experience and watching so many inventors make mistakes and waste money, we learned that most inventors don’t have the money or the knowledge to be a startup. The cost for a startup is $250,000 to $500,000 and the failure rate is extremely high.
With licensing many products, we reduce the cost and the risk. We have the best industry experts giving us their input on the projects and watching to see what products get through the AOS process and become available for licensing.
Unlike venture capitalists, angels and downstream institutional investors (like Fidelity, public pension funds, and the like), at AOS we don’t believe in over-investing in any one idea or invention.
We know from our many years in the inventing industry helping clients develop and commercialize their inventions that for a minimal investment of no more than $75,000, any idea or innovation should be able to demonstrate its commercial viability.
Our experience has taught us that if an invention (or an idea) has failed to demonstrate commercial viability after that level of investment, then 99% of the time that invention will never go anywhere. So we consider the $75,000 cap to be a more than adequate investment amount to determine if a product has the potential necessary to get to market.
At AOS, our philosophy is, rather than continue to throw money down the proverbial “rathole”, we will cut our losses and move on. The temptation that “if we just held on for one more day, put a little more money into it”, however tantalizing, is, more often than not, a fool’s errand.
By approaching invention investment in this way, while we may, infrequently, but occasionally, have a failure, we’ll never, ever suffer a disaster. And, that’s good news for you, the investor. As we’ve mentioned before, we have skin in this game too, and by protecting you, we also protect ourselves.
You can always find out more information about us and our unique process on our webpage: www.archimedesoffspring.com
