Presenting your licensing opportunity requires more than just showing how your intellectual property works. That’s important, but its only one part of what a potential partner needs to know. If you fail to give them the critical information, they won’t be able to decide if they want to license it.
To make sure you give them the right information, here’s a list of the 5 things a potential partner needs to hear about your IP:
1. The IP Works
Creating a licensable IP begins with the prototype. A finished product is even better. A prototype that clearly illustrates the functionality, creativity and utility of your IP is your most important tool. We live in a tangible world, and the impact of being able to hold and try a new product vs. describing it or showing a drawing, is substantial. Videos, animation, and 3D printing are some low-cost ways to create a “tangible” sample of your IP. One of my clients created a short video to “show” how their sound technology worked.
2. It’s Got a Big Competitive Advantage
A big part of what makes your IP licensable is what it offers in terms of a competitive advantage. The bigger the competitive advantage, the more licensable it is. A competitive advantage is having something that others don’t have. It’s like creating a moat around your business. If you have the latest and greatest new cooking gadget, or the latest and greatest new toaster, or new software program – something that others don’t have – you’ve got an advantage. That’s what licensing partners are looking for.
3. The IP Makes Money
Your IP has to PROVE it makes money – it’s better, faster or cheaper, solves a big problem or does something no one else does. Licensing partners DON’T license IP…they license money. Remember, the number 1 key question for a potential licensing partner is can they make money with your IP. The real value of your IP is the way a licensing partner can use it to increase revenues, cuts costs, or gain a competitive advantage. If your IP is in a highly competitive market, such as apparel, software or consumer electronics, costs less to make (or deliver), and sells for more, your IP is very valuable and licensable.The more you can show a licensing partner why your IP is valuable to them, the more interested they will be in licensing it.
4. The IP is a Good Fit
Your IP must fit both the market and your partner. Licensing partners need a clear understanding of why customers would buy your IP. And that comes down to what it does. What problem does your IP solve or benefit does it provide? Who is buying the product/service or technology and why? Do the products satisfy wants, needs or desires (“needs” command a higher price and profit – but also higher competition). The second fit is the licensee’s capabilities. Not only does this cut the risk, it also makes it more likely that the potential partner will consider the licensing opportunity. For example, if your IP is a “mass market product”, the potential licensee needs national distribution capabilities. The better your IP fits the market and a companies capabilities, the more likely they will want to license it.
5. The IP is Easy to Understand
Packaging your intellectual property in a way potential partners will find attractive makes your IP easier to license. Potential licensing partners will be more interested in licensing your IP if they understand what it does, and how it will make money. Providing data from test markets, product sales, customer feedback, sourcing production materials, operating manuals, or other supporting proprietary information will enhance your licensing opportunity “package”. A well documented licensing package also helps to speed the process of reaching an agreement and shorten the time it takes a licensee to complete their own evaluation of the IP.
Be sure you keep these five points in mind when preparing and pitching your licensing opportunity. Don’t make the mistake of pouring your guts out with the life history of your IP. That’s not what a potential licensing partner wants to hear. If you tell them the right story, they’ll want to know more, but if you give them the wrong information, they’ll wind up walking away.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges and startup events. He’s a published writer with articles appearing in several prestigious trade magazine including The Licensing Journal, Intellectual Property Magazine, and License India. Rand also mentors at the Cal State Fullerton School of Business and Economics and is a judge for their startup business plan competitions.