In the not-so-distant past, if a person came up with a concept for a new product and wanted to try to monetize their idea, the only options available were to either start a company to produce and sell the product or to secure intellectual property rights and attempt to license the idea to an already-established company. Both of these options require a lot of knowledge and a lot of risk.

Starting a company is out the question for many folks, who lack either the interest or wherewithal. Licensing, while easier than starting a company, still usually requires some substantial investment in both time and effort. With design, prototyping and patenting expenses, even a simple licensing effort can cost $10,000 or more, and the sky's the limit in terms of fees, not to mention the time investment.

Related: Why Licensing is the Best Way to Get Your Product on Store Shelves

Within the last few years, "idea guys and gals" who wish to turn their concepts into cash have a new low cost option -- crowdsourced innovation companies. To be clear, I'm not talking about crowdfunding sites such as Kickstarter, but rather crowdsourced innovation submission sites. There are several of them out there, and each has their own spin, but they all have a few things in common:

  • With a crowdsourcing company, the inventor is one of "the crowd," who may or may not be experts. These platforms cater especially to the novice.  
  • The crowd submits a plethora of ideas -- in varying stages of completeness, from mere words to advanced prototypes with patents already in place.
  • The most promising ideas are chosen for further development, either by the company or by crowd vote. Sometimes the crowd gets to have input on the design as it progresses.
  • The inventor receives a royalty based on sales of the product if it's successfully commercialized.

The two most visible crowdsourcing platforms are Edison Nation and Quirky. Quirky is essentially a manufacturer with a unique and interesting front end, where it gets ideas and input on its products from the crowd. Anyone who influences the products gets a small piece of the pie (i.e. money). It's a very cool idea.

Edison Nation focuses on licensing the ideas submitted. They conduct "live product searches" for corporations so they can see the best of hundreds (or thousands) of products submitted in hopes they will choose one to manufacture. The inventor keeps half of the royalties of any deal cut. They've had some huge infomercial hits, and are also a great company I've worked with extensively in the past.

Related: Will the New Patent Law Kill the Garage Inventor and Startup?

The advantages of crowdsourced platforms for inventors are:

  • Low cost: There is typically little or no cost to submit ideas. If your idea is chosen, with potentially almost no investment, you can possibly make real money. This is a major breakthrough because many more ideas have the opportunity to see the light of day and get their chance to benefit consumers -- and the world. For those with far more ideas than capital, it creates a means by which they can be rewarded for their creativity without having to devote their lives to it.
  • Low risk: Just like with licensing, the company providing the platform is much more likely to succeed than an independent inventor at the commercialization effort, due to their established relationships with other companies in the distribution chain.
  • Low effort: Once you have submitted your idea, your work is done. You can basically sit back and collect a check ... if you "win."

The disadvantages of crowdsourced platforms for inventors are:

  • Lower potential return: Since the company is financing the development and taking all the risk, the inventor receives a much smaller sum of money. This is fair, and makes perfect sense, but it limits the upside potential of the invention. If you have a killer idea and have the means to pursue it, licensing or starting up a company may prove to be more lucrative.
  • Loss of control: The inventor loses personal control over the idea and has to watch from the sidelines, which can be frustrating. Even though this can also happen with licensing, many manufacturers allow licensors be part of the development process.
  • Winning can come with a price: More fully developed and complete ideas have a much better shot of "winning," so it can still be a significant investment in development if the inventor wants to increase their chances of success in this model. If this is the case, licensing makes more sense.
  • Loss of intellectual property: The company takes the IP once the item is submitted. The company will own it, and it's no longer the property of the inventor. This is true whether you "win" or not.  

So when does it make sense to submit an idea to one of these platforms? If you have an idea you don't want to invest in, but think it could have commercial merit, or just have more ideas than you ever could possibly pursue, crowdsourcing is for you.

However, if you're passionate about your product, have the means, and want to be a big part of your product's life, you may want to choose a different path. Regardless of your decision, crowdsourcing platforms are a great new opportunity for inventors on a budget.

Related: 3 Things You Need to Know About Launching a Product Business