After reading what has gone before you may well conclude that an inventor’s life is not a happy one but let me remind you that whatever road you take to seek fame and to win fortune you will find it just as full of petty strife and big difficulties.

In sooth inventing is one of the easiest and pleasantest pursuits in which you can engage to make a good living and many inventors who were as poor as Job’s turkey when they began to think up new ideas and concoct useful schemes now have their thumb-nail biographies in Who’s Who and live on the fat of the land.

And you can do the same thing too if you have a real invention and a lot of native shrewdness. Yes, to be a money-making inventor you must have inventive ability plus business ability, or rather the other way about, for business ability counts for more in the game of success than inventive ability.

There are hundreds of inventors of the highest type who are comparatively poor men for the lack of business ability while many others, like Edison, all round inventor, Westinghouse, inventor of the air brake, and Eastman, inventor of the kodak, have made fortunes that run up into the millions because they are first, last and all the time hard headed business men. And you must be a business man too if you want to make money out of your invention.

How to Raise the Initial Funds.—By initial funds I mean the first money. It is easy to tell an inventor who has a rich dad or a bank account in his own name how to finance his invention.

But mine is a harder task in that I am taking it for granted you are like 999 out of every 1000 inventors and that you have little or no money, are fired with ambition and that you have a big idea.

Assuming that this is the precise state of affairs let’s go back to where we started from in Chapter I, that is to the last part of it where you had drawn out your invention on paper, written a description of it and had some of your friends put their signatures to it.

Should your invention seem to your friends to have merit it will take but very little urging to get one or more of them to furnish whatever amount of money you think will be needed to carry on the experiments or to build a working model. Of course you will in turn have to agree to give him, or them, a certain small interest in your invention, and this is fair exchange for you are putting up your brains against their money.

If your invention is a small one and but little money is needed to develop it into a marketable product a 5 per cent. interest is enough to give those who back you for taking the risk. A 10 per cent. interest is ample to offer for sufficient funds to develop a more complicated invention.

This will leave you a 30 or 35 per cent. interest to sell to others later on, when you have a working model and your patent is granted, to furnish the capital necessary for equipping a factory to make the device and to provide funds to market it—that is if you work out a plan along these lines.

But take my advice and keep a 55 per cent. interest in the invention for yourself; otherwise the control of it is taken out of your hands, and whenever it suits those who hold the controlling interest to freeze you out they will do so with pleasure.

By using the following form you can save the expense of having a lawyer draw up one for you and moreover you can also be sure there is no joker in it.

About an Interest in a Patent.—There is a big difference between assigning an interest in your invention and assigning an interest in your patent.

Many an inventor assigns an interest in his patent either before or after it is granted to some one who will advance the needed money. But this is a thing you should never do for after having made such an assignment, however small the part, the person who owns it can make, use or sell the invention which the patent covers, as he chooses, just as though he owned the whole patent and you can neither stop him nor even sue him for damages.

You can, of course, make, use and sell the invention covered by the patent too but usually it is the other fellow who gets the best of the bargain.

Royalties, Shop Rights, etc.—After you have built a working model and obtained a patent on it there are many ways of making money out of your invention.

One is to sell your invention and patent outright; another is to sell shop-right licenses; another is to have some manufacturer give you a royalty on each machine or device he makes and sells, and yet another way is to sell territorial rights, that is the town, county and state rights to manufacture your invention. Forms of agreements for all of these deals will be found in the Rules of Practice of the United States Patent Office.

Besides the above arrangements you can go into partnership with some moneyed man, or interest, and finally a good plan, where a large amount of capital is required to build a plant and start a business, is to form a company, or corporation as it is called.

Forming a Partnership.—Now that you have your model completed and your patent granted you will of course want to begin commercial operations immediately, and let’s suppose you think better of forming a partnership than any of the other above named plans.

There are a hundred ways to secure a partner, or business associate as the sharer of your fortunes is called, but it is a mighty hard thing to get a satisfactory one. A favorite way to enlist capital and one that is often resorted to by inventors in large cities is to advertise in the newspapers under the head of business opportunities.

An advertisement of this kind may put you in touch with the man you are looking for but it will also bring you a lot of curiosity seekers, riff raff and other undesirables who come generally with a view of inducing you to part with your money rather than to invest any of their own. This is also true of the so-called brokers who advertise to procure working capital for meritorious inventions.

One of the best ways to secure a partner who has the necessary capital and requisite business ability is to arrange to show your invention in operation and then invite your moneyed neighbors and the business men of your town, though you may not know the latter personally, to call and see it; and they will call and get interested if they believe in its possibilities for they are as anxious to make more money as you are to make a little of it, and they are keen to the fact that great fortunes have been built up out of simple as well as complex inventions.

This method of showing your invention to your towns-folk, either individually or collectively, is the safe way to get one or more good, substantial men interested in your proposition and to lay the foundation of a paying business.

Where the Promoter Comes In.—There are promoters and promoters; by which I mean that there are various sorts of promoters and then some.

A tin-horn promoter is an unprincipled fellow of some ability who secures an option on a patented invention, or on the stock of a company based on an invention, and exploits it for all he is worth to his own profit and without regard to the inventor or the stockholders. The chief business of a tin-horn promoter is to secure control of the entire stock issue of a company, sell it at inflated prices, pocket 90 per cent. of the proceeds and either doctor the books or disappear then altogether. Steer clear of the tin-horn promoter.

An ordinary promoter is merely an agent who acts as a go-between for the inventor and people with money to invest and by his enthusiasm brings them together for the good of the cause. A real promoter is a genius who possesses both business ability and the necessary wherewithal to start, accelerate and carry on any kind of an industrial, financial or commercial enterprise.

You will meet the promoter in one shape or another as soon as it becomes noised around that you have an invention of merit. The ordinary promoter will be of assistance to you at any stage of the invention where experiments are still to be made and the patent is yet to be granted. He may also prove of service after the preliminary work is done in securing for you a real promoter.

On signing contracts with the latter he will relieve you of all the cares of starting the business or of starting a company to start the business. And if you are not shrewd and careful and know just what he is doing and you should fail to have a hard and fast contract he will not only be likely to relieve you of the business cares but of everything else you may hold dear and sacred in this world.

An ordinary promoter will ask about 25 per cent. of whatever money he brings in for your use in developing the invention and a certain small interest—1 to 5 per cent.—in the company that exploits it. The real promoter wants and usually gets a working agreement of 50 per cent, of whatever profits there may be made out of the invention. If possible you should hold a 55 per cent, interest for this will give you the whip-hand and will save you much trouble in the end.

Few promoters though will agree to such a division and about the only way you can keep the controlling interest is to organize a company and manage it yourself but this takes business ability of quite a high order.

What a Stock Company Is.—A company is a number of persons who band themselves together for business purposes. A stock company, or stock corporation to call it by its proper name, is a company whose capital is represented by shares and which is held either in the treasury of the company, or by persons who buy the shares.

Three or more persons may form themselves into a stock company for any industrial purpose in the State of New York. A stock company must be incorporated, that is legally formed, under the laws of a State and different States have different laws. A copy of the corporation laws of any State may be had free of charge by applying to the Secretary of State.

How a Stock Company is Organized.—Suppose, now, you and two other, or more persons want to organize a stock company under the laws of the State of New York for say $10,000, although the value which you, and those interested with you, place on your invention and patent may be a great deal more.

Then you and the others make, sign, acknowledge and file a certificate of incorporation, a reproduction of which is shown in Fig. 83 (see outfit necessary for a Corporation), and this must contain: (1) the name of the proposed company; (2) the purpose for which it is formed; (3) the amount of the Capital stock (which means the entire amount of the stock, for which the company is capitalized and which, let’s say, is $10,000); (4) the number of shares of which the capital stock is to consist (each share of which must not be less than $5 nor more than $100 and the amount of actual capital must not be less than $500 in cash with which the company is to begin business) and the amount of cash must be stated; (5) The certificate must also contain the name of the city, village, or town, in which its principal business office is to be located; (6) its duration, which you can put at 50 years; (7) the number of its directors which must be not less than three; (8) the names and post-office addresses of the directors for the first year, and (9) the names and post-office addresses of the subscribers to the certificate of incorporation and a statement of the number of shares of stock which each agrees to take in the company. A certificate of incorporation blank ready to fill in can be bought for 10 cents of stationers who deal in law books and forms.

The Fees of the State.—The fees for incorporating a company are payable in advance at the Secretary of State’s office and these are for (a) filing the certificate of incorporation $10; (b) recording it, 15 cents per folio of 100 words; (c) a certified copy, if you want one, 15 cents a folio and $1 additional for the seal affixed to it; (d) the organization tax, payable direct to the State Treasurer in advance is 1-20th of 1 per cent, on the amount of the capital stock, which on a capitalization of $10,000 would be $5, and (e) all personal checks for fees or taxes must be certified, that is to have the paying teller of the bank your check is drawn on write good on it together with his name.

Outfit Needed by a Corporation.—To begin business with after you have received your certificate of incorporation you must have:

(1) A minute book in which to record the proceedings of the directors’ and stockholders’ meetings. A minute book with printed forms can be obtained which makes it easy to record the minutes accurately.

(2) A stock certificate book; suppose your certificates, or shares, have a par value of $100 then you will need a book of 100 certificates to equal $10,000. A stock certificate is reproduced in Fig. 84.

(3) A book of account is required by the New York State transfer tax law where companies are doing business in the State, and transfer agents must also have one to show every transfer of stock. Neglect to keep this book imposes a heavy penalty.

(4) The New York transfer law also requires New York companies to keep a stock transfer book which shows when shares, or certificates, are sold, or transferred, by one person to another.

(5) A stock ledger is also needed by every corporation to enter the stock transactions of each day in. A combination book with all of the three last named can be bought ready for use.

(6) A corporate seal, which is an embossed impression of the name of the company, see Fig. 84, is made by a seal press as shown in Fig. 85, and this is also required by law. The whole outfit above described for incorporating and maintaining a company can be bought for the small sum of $10 or less of the Brown-Green Company, 48 John Street, New York City.

How a Stock Company is Operated.—When you receive your certificate of incorporation you can then call a meeting of the directors (named in the certificate of incorporation) or board of directors as they are called. At this first meeting the directors elect the officers, that is a president, a secretary and a treasurer.

The president then takes the chair and the secretary writes down all the minutes of the business transacted at this and subsequent meetings. The first business that will come before the directors after the election of the officers is to make the stock of the company full paid. To do this you must turn your invention and patent over to the company in exchange for the full amount of the stock the company is capitalized for, say $10,000. In other words you sell your right, title and interest in the invention and patent for $10,000 worth of stock, which is all of it.

Next you turn back into the treasury of the company 45 per cent, of the stock and keep 55 per cent. for yourself. The 45 per cent. of the stock in the treasury, which is called treasury stock, can then be sold at its par value, that is full value, which is $100 per share or at any smaller price the board of directors may agree upon. The sale of the treasury stock gives the company the capital it needs to start the business and to keep it moving until it becomes self-supporting.

If $4,500 is not enough money to finance your company then capitalize it for whatever amount you think will be needed and add about 50 per cent. more to it. You can incorporate a company for $100,000 just as easy as you can for $10,000, but this is a matter you and your friends should consider most carefully.

Should you at any time sell more than 5 per cent. of your holdings, that is of the stock you own, the control of the company will pass out of your hands and the other directors and stockholders will whip-saw you as they like, if they can pull together, for the majority of the stock will be in their hands.

The stock, or securities, as it is called, of a company can be sold in a number of ways but the usual method is to sell it (a) by personal solicitation, (b) through stock-salesmen, (c) have a broker take the whole stock issue, and (d) by advertising. If your invention is what it seems to be, your patent as good as the average patent, your company capitalized for a moderate amount and the product looks good for making quick sales and large profits you won’t find any trouble in placing the stock with the moneyed people of your community.

Besides receiving 55 per cent. of the stock for your invention and patent you should as the inventor and practical man be voted a salary of $25, $50 or $100 per week to superintend the manufacturing end of the business. Have a salary contract drawn up with the company in which the amount you are to receive weekly and the length of time you are to receive it is stated, and have it signed by the president and secretary for the company.

About Retaining a Lawyer.—In all of your business dealings with other people from the very beginning the safest way is to have the advice and help of a corporation lawyer and while he is keeping you safe, whole and harmless from all damage be sure he doesn’t mulct you while he is doing it.

A good way is to pay him a flat-rate for whatever advice he gives you and the contracts he draws up for you. But if you can’t do this then give him a 1 per cent interest in the net amount which you may receive from your invention.

When you and your associates have decided on organizing a company the usual and proper way is to retain a lawyer and have him take care of the incorporation certificate, conduct the first meeting and open the books, to the end that it may all be done right and in good legal form.