Paying for Tech Help With Future Royalties An entrepreneur sees the funding light when she agrees to pay her engineer in royalties based on future sales.
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Linda Pond didn't have the funds she needed to build the FAB Light--an LED light for coolers, toolboxes or tackle boxes--which she and four partners dreamed up during an evening softball game. What the Ottawa, Ontario, entrepreneur did have was a rough prototype of the product and a professional relationship with a local engineer.
To finish developing the lights, Pond struck a royalty arrangement with that engineer, Steve Carkner, CEO of Ottawa firm Panacis, agreeing to pay him a portion of sales once the product hit stores. By deferring product development costs, Pond saved approximately $60,000, which allowed her to funnel the $40,000 she had into patent fees, product materials and travel.
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