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Startup Capital for Investors

How to raise the cash you need to boost your product off the ground

This story appears in the May 2004 issue of Start Up.

Raising money has always been a problem for inventors, whether they need funds for a patent, for a prototype, or for production. You need more money than ever to cover the high costs of production and to get into the market with as much momentum as possible. But inventors have an easier time raising money because of manufacturers and marketers' willingness to help fund new projects, and because of new security rules established by the SEC. Inventors can also benefit from community-based funding that rural areas offer to entice business. Of course, all this doesn't mean raising money is easy. You need a good plan, a good product and support from potential customers. If you have these, you'll find that money is available.

That said, don't rush to quit your job. Many inventors use credit cards or personal loans to fund at least the first phase of their inventions, and these loans will be hard to get if you are self-employed with no income. Instead, apply for your loans or credit cards before you quit. You don't want to take on so much debt that you'll go bankrupt, but it helps to have an extra $5,000 to $10,000 in credit. Also, try to keep working for as long as possible to maintain your income until you begin making sales.

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