Basic Statistics on the Success Rate and Profits for Independent Inventors


Entrepreneurship: Theory and Practice

Winter 1998, vol. 23, n°2, pp.41-48

Departments: Economics & Decision Sciences, GREGHEC (CNRS)

1,095 responses were received from a telephone survey of Independent Inventors. The majority of inventors surveyed (89%) are male, and a plurality of their Inventions are designed for consumer products (47%). Conditional on commercializing their invention, and at development costs about 1/8 of those in established firms, Inventive efforts by independent inventors lead to gains virtually comparable to those of established firms. Their innovations survive for about as long as the average start-up. Gross profit margins are comparable to the pharmaceutical industry (29%). However, only a small fraction of inventions developed by independent inventors reach the market (6.5%). The probability of reaching the market is four to eight times less than for Inventions developed by established firms. Why do only a fraction of inventions developed by Independent inventors become commercialized when those that do commercialize are quite profitable and survive for as long as other start-ups?