How to Avoid Desperation Licensing

Don’t’ let this happen to your start-up. You spend all your money on hiring the right people developing your IP, travel to meetings, investor presentations, legal fees, prototypes and marketing and other expenses that just pop-up. One day, you’re accountant tells you your current cash burn rate is only enough for six more months.

begging, desperate

You scramble to cut costs and try to figure out a way to get more money. It’s desperation time. You head off to quickly try to raise money but at this point it means giving away control of the company. Your next option is to find a way to generate cash with your IP by licensing it. The problem is you didn’t plan for this option, and now you’re licensing out of desperation to find a partner before you run out of money.

Today’s smart start-ups know that licensing must be part of their go-to-market strategy. The key is starting the licensing process as soon as possible. That means making sure your IP is properly protected, identifying revenue opportunities, and a prototype or proof of concept is ready to go.

You’ve got options when it comes to using licensing to build your start-up. One strategy is looking for a partner internationally, while you focus on your core market. If you lack manufacturing or distribution resources, a second strategy is finding a larger partner in a different market, and get access to their lower production costs. When you start generating cash flow, you can start your own production directly.

Licensing is also a good strategy to find a new product or technology for your start-up. Licensing a market ready product (brand or technology) is less risky and lower cost than developing it from scratch. Instead of eating up your money building something from scratch, you’ll get into the market faster and focus your resources on marketing and selling.

One of my clients used this strategy to successfully to launch their business in the US. They didn’t have the money to support building their brand from scratch. Instead, we used licensing to acquire rights to some of the biggest and most popular kids characters. My client got immediate access to major retailers without the large promotional dollars required, and focused their money on producing and selling their toy products.

Don’t wait until your startup reaches its “desperation” point. Your startups most valuable asset is it’s intellectual property. Licensing can be used in many ways, including getting resources, launching into new markets faster, gaining access to retail channels, and attracting investor capital.



The Licensing Toolkit: 5 Essential Tools for Managing and Making Money with your IP

If you don’t know where you’re going, how can you get there? Without an action plan, you risk spending your time, money and resources on the wrong actions.  Your IP is a money-making asset and you must have a licensing plan to make money with it. Click here for more information.

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