Are You Pushing Away Potential Licensing Partners?

One of the biggest mistakes you can make licensing your IP is to continuously try to push it on a licensing partner. This ultimately results in pushing away your partner, especially if your IP doesn’t fit their business or their customers needs.

The best way to market your IP is by promoting its value and the solution it offers. This attracts partners to your IP as opposed to trying to push it on them because it’s a “great opportunity”.

Before presenting your IP to potential licensing partners, make sure it’s the right fit for their business and customers. To do that, here’s a list of five questions to review before presenting your IP. This will help you organize the attributes that makes your IP valuable to a potential licensee.

  1. Who will license the IP? Is it a producer, distributor or end-user? A producer uses your IP to sell a product, such as a toy manufacturer. A distributor is an intermediary who markets and sells to a reseller or directly to the customer, such as medical devices sold to the professional dental market. The end-user is a direct sale to a customer, such as a software end-user license.
  2. What makes your IP valuable to a licensee? Your IP is valuable if it solves a specific problem, fills a big need, or creates a new marketplace. Does it lower their production costs, is it a cutting-edge disruptive technology, or is it the hottest new movie that kids are clamoring for.
  3. What makes your IP so compelling? What does it offer in terms of a competitive advantage? The bigger the competitive advantage, the more valuable it is.  A competitive advantage is having something that others don’t have. It’s like creating a moat around your business. If your IP is a cost saving medical device technology, or a breakthrough production management software system – something that others don’t have – you’ve got an advantage. That’s what licensees are looking for.
  4. Where are the customers located? What are the distribution channels to reach those customers? Does it fit their distribution channels? An established market is more valuable because it has existing customers and distribution channels. It’s easier and more cost-effective to sell to a limited number of large customers than it is to many smaller ones. On the other hand, if it’s a new breakthrough technology, with no market and long customer learning curve, it’s a higher risk to get it established in the market.
  5. Is it market ready or is there still development needed? Does it have to be tested or can it go to production immediately? A product or technology that’s market ready saves a company time and money developing and launching a new product. If it’s in the market, you can strike an agreement quickly. If your IP is only at the prototype stage, a potential partner will only be interested if it meets a clear market need in a convincing way. In some cases, you may even be able to license it in the concept stage if your IP is a potential breakthrough technology in a major market.  A good rule of thumb is the closer to market ready your IP is the more likely a company will be interested in licensing it.

Answering these questions will help you make sure your IP is a strong fit with the licensees capabilities and business goals.

Remember you’re not licensing IP…you’re licensing a solution and money-making opportunity. One of the biggest mistakes is trying to push your licensing deal by focusing only on the technology and its technical aspects. Your IP must be presented in such a way that a potential partner gets it, understands it, and sees the value that it brings to their company. If not, you’ll wind up pushing them away by missing the value points that tells a potential partner why they should license your IP.

 

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