The Money of Invention: Navigating Funding and Tax Laws

Securing funding for a new invention can be a daunting task, but understanding the options can make it more manageable. Government grants can provide up to $1 million to support research and development.

For many inventors, crowdfunding platforms like Kickstarter and Indiegogo offer a viable alternative to traditional funding methods. These platforms have helped launch numerous successful projects, with some raising over $10 million in a single campaign.

To navigate the complex world of tax laws, it's essential to understand the different types of taxes that apply to inventions. In the United States, the tax code considers intellectual property as a capital asset, which means it's subject to capital gains tax.

Venture capital has indeed been a force in innovation, accounting for 18 percent of innovative activity in the United States by 1999.

To access venture capital funding, it's essential to understand that confidentiality is crucial when seeking funding. Public disclosure of your invention before filing for IP rights can prevent grant and/or invalidate your IP rights.

Some sources of funding are only available after IP rights have been applied for. It's also worth noting that venture capital investing will remain a critical force in bringing new ideas and innovations to the marketplace.

Here are some key facts about venture capital and funding:

The book "The Money of Invention" by Paul A. Gompers and Josh Lerner provides a comprehensive guide to understanding the relationship between venture capital and entrepreneurial success.

The book "The Money of Invention" by Paul A. Gompers and Josh Lerner is a must-read for anyone looking to understand the power of venture capital in innovation. The authors answer the chicken-or-egg question, showing that venture capital has indeed been a force in innovation.

Venture capital accounted for 18 percent of innovative activity in the United States by 1999, according to the book. This trend will continue, with the authors asserting that venture capital investing will remain a critical force in bringing new ideas and innovations to the marketplace.

The book explains in detail how the venture capital industry works, including its boom-and-bust cycles. The authors put the feverish venture capital activity of the last few years in the context of the broader history of the industry.

Gompers and Lerner argue that the next decade is likely to see a fundamental transformation in the structure of the venture industry, as a relative handful of large, professionally managed venture capital groups becomes increasingly dominant.

Seeking funding for your idea or business can be a crucial step, but it's essential to consider the timing carefully. Any public disclosure of your invention before filing for IP rights could potentially prevent you from receiving funding or even invalidate your rights.

You should manage disclosure under non-disclosure agreements (NDAs) carefully, as these agreements can be breached. Some sources of funding require you to have already applied for IP rights.

If you're unsure about the best time to seek funding, consider the following:

This means you should research the specific requirements of each funding source to ensure you meet their criteria.

When starting a new business, it's essential to consider the tax implications of your inventions. You'll need to register for a tax identification number, such as an Employer Identification Number (EIN) in the US.

The tax benefits of R&D expenses can be substantial. For example, in the US, the Research and Development Tax Credit can provide a tax credit of up to 20% of qualified R&D expenses.

As an inventor, you may also need to consider intellectual property (IP) protection, such as patents, trademarks, and copyrights. This can help you maintain control over your inventions and prevent others from profiting from your work.

Tax Relief Claims can be a game-changer for businesses, especially those in the tech sector. If your invention creates an advance in a technological or scientific field, you may be eligible for Research and Development (R&D) tax credits.

R&D tax credits can help you claim back money, but you'll need to meet certain conditions and eligibility criteria. It's best to ask an accountant or tax adviser about these.

Owning a granted British patent can open up a lower corporation tax rate of 10% for qualifying earnings, but this is only for companies that pay corporation tax in the UK. This is known as Patent Box tax relief.

To qualify for Patent Box tax relief, you'll need to be an exclusive licensee or owner of a granted British patent. Your accountant or tax adviser can provide more details about the conditions and eligibility criteria.

If you're involved in an intellectual property dispute, IP insurance can provide peace of mind and even encourage a settlement.

IP insurance acts as a war chest that signals you're financially prepared to pursue litigation if necessary.

CrowdJustice is a platform that allows you to crowdfund for the cost of bringing or defending legal proceedings, including intellectual property disputes like copyright or Trade Mark disputes.

This can be a great option for social causes with wider public appeal, but it's worth noting that CrowdJustice typically involves a cause that might have a broader impact.

You can also use a combination of funding sources, depending on whether you've filed IP rights and your commercial goals.

Applying for IP rights is another crucial step, and at Albright IP, they can assist with drafting and filing patent, design, and Trade Mark applications.