Choosing the Right Invention Licensing Company
When you’ve spent significant time conceptualizing an invention, developing it and perhaps even selling it, your foremost concern is usually: “How do I get this out there? How do I turn my idea into something that will reach a vast consumer base and generate real revenue?” Unfortunately, this common mindset is well-understood by invention companies that are less-than-reputable. They prey upon inventors’ optimism to make promises that are impossible to keep, and to extract unreasonable sums of money for services that do nothing to further the product’s chances of success. It’s one of the most serious problems facing our industry today, and a contributing factor to why some of the best, most cutting-edge inventions never make it to market—because the inventor was victimized by a company that depleted their funds. Here is a list of ways to identify a disreputable company, and what you should expect from your product launch partner:
1. Hidden and Disproportional Fees- It’s a common tactic of dishonest companies to ask for massive upfront fees—sometimes upwards of $10,000—without outlining any concrete plan of action for manufacturing, marketing, sales, distribution, etc. The company may lead the inventor to believe that they are actively pitching the product, or proactively marketing, when really they are only providing a binder containing some sales materials, or a DVD of virtual designs—pitching materials that are fairly useless without the proper guidance. Certainly not worth the enormous cost. Companies also attempt to lure the inventor into their system by not disclosing the fees that become necessary at various stages of the process. The fees-for-‘service’ will gradually increase, until inventors find themselves having invested thousands while no substantive work is being done. The reason these unsettling tactics are frequently successful is simple: dishonesty.
2. Excessive Praise/Promises - Invention companies find it relatively easy to scam inventors because they tell them exactly what they want to hear. Regardless of merit, these companies accept 99.9% of submitted inventions. Since they provide so little value to their clients, they are unscrupulous in the products they take on, always heaping praise and illusions of wealth on inventors so they will continue to invest money in their services. While every inventor wants to believe their idea will change the world, the reality is that the vast majority of products just aren’t good enough for mass-market or DRTV. If you’ve submitted a few ideas and each one is ‘the next big thing’ or ‘one of the best ideas that we’ve seen in a while’, you should be suspicious. At Lightning Launch, we recognize the importance of being honest with our clients. After our review meetings, we select only a small percentage of products for our roster. The rest are declined, and we explain to the inventor exactly why they were declined. Our hope is that this will prevent the inventor from wasting additional money on a product that is not market-ready, and might re-invest that time/capital into an idea potentially more worthwhile. Well call this the ‘Value of No’.
3. You Get What You Pay For- While this might seem at odds with the first point, we believe that a company wasting your time is equally reprehensible as a company wasting your money. When we talk to new clients, they often tell us that they had previously worked with a consulting firm or sales rep that signed their product for several months, at no charge, and never produced any results. This jades the inventor about both the merits of their product, and about the integrity of the industry in general. Most reps or consultants, while not exactly disreputable, do not place limits on their roster of inventions. Oftentimes they have a list of 100+ products and simply do not have the personnel, the resources, or the time, to give each one the time it deserves. As these companies rely solely on commission, they quickly identify their 5-10 products most likely to sell, and devote the majority of their energy to them, while the rest fall by the wayside. This lack of results is, unfortunately, discouraging to many inventors. It’s true that the financial investment is minimal, but in this industry the effective use of time is essential. An invention backed by a dedicated team with a holistic approach, and a limited roster of products, will always have a better chance at success than one that sits on a waiting list for free.
It is our hope that, by keeping these warnings in mind, inventors can avoid costly relationships with companies that provide no value. We understand that funds are limited, and need to be invested as wisely as possible. By illuminating the landscape of invention companies and what to watch out for, we aim to make that landscape more easily navigable for innovators searching for a worthy home for their ideas.