Licensing your patent to established companies beats selling it outright or starting a startup. You get ongoing royalty income, stay in your wheelhouse as an inventor, and avoid the trap of becoming an entrepreneur. Use law firms and accounting firms to connect you with potential licensees.
Chapters
How to make money from a patent. So I got a great question from one of my YouTube viewers, Franz— love you guys— who wrote in with this long comment about wanting to make money from a patent. And basically he's got this patent and he's trying to figure out, should I go out and raise money, get investors, and build a company to create this product, or should I sell my patent? What's the best way to make money? He wanted my advice. Here's the thing, okay? Typically, the best way to make money from a patent is to license it out. So it's not to go out and raise a bunch of money and become an entrepreneur and build this huge business. And selling it is a potential option, but is a short term. You get one-time cash influx. Whereas better if you can license it to a company and then every time they use it, they're using it in their production, you get a small piece of the money. So you get royalties coming back to you every month, every week, whatever it is. Okay, that's typically the best way to do it. The reason is you have to look at what your skill sets are. Okay, a lot of people who are inventors are really great at inventing. That's what they're really, really good at. That's what they should stick to. That's what they— that's where they get their most fun and enjoyment and excitement is from inventing, not from building a huge company. But if you've got to go out and raise millions or hundreds of millions of dollars to build this business, to leverage the patent, that may not be what you're interested in. It may not be what your skill set is. And most of the inventors who go out and try to do that, they fail because they're not excited by that. That's not what they— that's not what they want to do. They just want to invent. So stick to inventing and find the company who will pay you every time they use the patent. You're licensing it out. So in this case, Franz was saying that it's, it's really expensive to make this product. It wouldn't make sense for him to do it on his own. So he's either got to raise lots of money or go out and sell it. And what I would encourage you to do is, for example, so think about, say it helps cars, okay? Say it helps cars with, I don't know what your patent does, but let's say it helps the car industry. You're not going to go out and raise hundreds of millions of dollars to create your own car company. It's better to go out and license it to the car companies, and every time they use it in their car, you get paid a certain amount. Now, how do you go out and negotiate one of these deals with a huge company? Now, you may not have the connections to do it, The best way to start, I found, is through connectors. And the two best to look at are lawyers and accountants. The bigger the name brand, the better. So an easy way to start is look at whoever did your patent. So whatever company that you signed up with, hopefully it's not just down the street patent broker, you know, some patent lawyer, but somebody who's actually from a bigger company. If they're from a bigger law firm, then there are other connections in that law firm who have the in to the company that you need to talk to. So if you're dealing with a big law firm and they have a patent, you know, patent attorney that you're dealing with, people at that law firm know the, the car company that you're trying to sell to. They can make that connection for you. And part of their job as lawyers are not just to be lawyers, it's to help their clients. And you might be a small client for them, but the car company, that's a big client for them, and they want to make them happy. And they can bring them a deal that helps improve their business and makes them look good and gives them more billings down the road. So look at your law firm first and see how they might be able to help you. The other is accounting firms. So again, a lot of these big accounting firms, they have your client already. You just need them to make the connection for you. It can be a scenario where you're coming to them and you could be a potential client for them as well, albeit a small client, but you gotta make this deal happen. And they have the contacts to make it happen for you You just have to convince them that it's a good deal, right? For them to open up their contact book and make that introduction for you, it has to make them look good, right? This is the whole idea, is you're making them look good. You want them— you want their clients telling them, wow, thank you so much for making this introduction. So your invention has to really work and do a good job, and convincing the accountants and the lawyers that it will do that will help them, make them want to open up their books, make them open up their contacts, get on the phone, and set up the meetings for you. So that's my best advice. Don't try to raise some money to launch this thing. Don't just sell it outright, but try to arrange a licensing agreement where you're getting paid every single time somebody uses your patent. Believe. For those of you watching, like the video, thumbs up below. Let me know what you think, leave a comment, ask a question below. And click on my face to subscribe to the channel. Thank you so much. I'll see you soon.
