Physician inventors are often faced with the daunting task of raising capital to turn their invention into a profitable company.

David Scharp, speaking at the SEAK Non-Clinical Careers for Physicians Conference gave some suggestions for potential sources of capital. These include:

Source of Investors

  • Yourself
  • Family & Friends
  • Partners
  • Private Investors
  • Sharks
  • Angel Investors
  • Venture Capital Investors
  • Banks
  • Investment Bankers
  • Institutional Investors
  • Corporate Investors
  • Government Investors

Source of Grants

  • Private Agencies
  • Public Agencies

Yourself, Family & Friends are Hazardous Investors

  • The challenge of Truly Disposable Income vs Savings and Retirement Funds
  • Best Advice is to invest someone else’s money, not yours, families, or friends

Partners, Private Investors, & Sharks

  • Investment Partners need to be experienced investors
  • Private investors need experience
    • But you do not need to limit them to credited investors for hedge funds who are required to have $5M assets with restricted investment limits
    • Sharks are everywhere & always hungry to take your equity for high interest

Angel Investors and Venture Capital Investors

  • Angel Investors are in $200-$300,000 investment range with 10%-20% equity required from your company
    • Can combine groups to reach larger numbers
    • Excellent Start Up funding
    • Venture Capital Investors like the $1-$5 million range with controlling equity requirements for start up and small companies
      • Hold an equal amount for follow up investment
      • Some specialize in start up companies but will often take 80% equity position

Banks and Investment Bankers

  • Banks are not interested in investment but are beginning to make loans to small businesses and require personal guarantees for loans
    • but still tend to avoid startups in favor of 3 years of financials
    • and still require personal guarantee from owner
    • Investment Bankers usually will seek new investors for your needs and not invest their own funds taking fees and equity in return

Institutional Investors

  • These investors avoid startups and are interested in mid-range and larger companies

Corporate Investors

  • Their funding interest varies widely and generally looks for technology or products in which they are significantly already involved
    • But can look to fund new technology that they may want to acquire at a later date
    • Some have established start up funds for these activities
    • Excellent choice for product you want to sell your company at a certain stage

Government Investors

  • These are focused on the Small Business Administration loan programs through banks that range from a few hundred thousand to low millions of dollars as loans, not investments.  These also involve personal guarantees as since funds are managed through banks. 

For physicians interested in becoming a successful inventor, SEAK Inc. has a streaming course “How to Become a Successful Physician Inventor: Bringing Your Ideas to Market”.