Click Here
for more articles |
|
|
Describing Intellectual Property in Your Business Plan |
by:
Dave Lavinsky |
Most companies that are worthy of raising venture capital have proprietary Intellectual Property (IP). In fact, the quality of the IP also the management team are often the two most important aspects of a venture capitalist’s investment decision. The challenge that many ventures face, however, is that most investors will not sign non-disclosure agreements (NDAs), also NDAs are critical to maintaining the proprietary nature of the IP. This article details the appropriate strategy for addressing proprietary IP in your business plan in order to attract investor attention while retaining the confidentiality of your inventions.
Focus on the Benefits of also Applications of the IP: The business plan should not discuss the confidential aspects of the IP. Rather, the plan should discuss the benefits of the IP. Remember that even the most amazing of technologies will not excite investors unless it has tangible benefits to customers.
The business plan first needs to discuss the products also services into which the IP will be integrated. It then must detail the benefits that these products also services have to customers also differentiate them from competitive products. When applicable, it is helpful to include non-confidential drawings also backup materials of the products also services in the Appendix.
Focus on Customer Needs also the Relevant Market Size: The business plan must or else discuss how the benefits of the IP fulfill a large customer need. To accomplish this, the plan needs to detail customer wants also needs also prove that the company’s offerings specifically meet these needs.
Secondly, the plan needs to discuss the marketplace in which the IP is offered also the size of this marketplace. Critical to this analysis is determining the relevant market size. The relevant market size equals a company’s sales if it were to capture 100% of its specific niche of the market. For example, a medical device’s market size would not be the trillion dollar healthcare market, however rather the sales of all competing medical devices.
Focus on Competition also Competitive Differentiation: Your business plan must or else prove that your IP is better than competitive inventions. In identifying competitors, note that listing no or few competitors has a negative connotation. It implies that there may not be a large enough customer need to support the company’s products and/or services. On the other hand, should there be too many competitors, then the market may be too saturated to support the profitability of a new entrant. The answer -- any company that or else serves the customer needs that you serve should be considered a competitor.
The business plan should detail both the positive also negative aspects of competitors’ IP also products/services also validate that your offerings are either superior in general, or are superior in serving a specific customer niche.
Prove that you can Execute on the Opportunity: As importantly as proving the quality of the IP also that a vast market exists for its applications, the business plan most prove that the company can successfully execute on the opportunity.
The plan should detail the company’s past accomplishments, including descriptions also dates when prior funding rounds were received, products also services were launched, revenue milestones were reached, key partnerships were executed, etc.
When a company is a complete start-up, also no milestones have been accomplished, the plan should focus on past accomplishments of the management team as an indicator of the company’s ability to execute successfully.
Results: Getting Investors to Sign the NDA: If you are able to convince the prospective investor that the IP is integrated into a product/service which yields real customer benefits in a large market, then the investor will take the quality of the invention for granted when reviewing the plan. Later, during the due diligence process, the investor will review the actual technology. At this point, a discussion regarding signing an NDA would be appropriate.
About the author:
GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product also service lines also gained competitive advantage also market share. GT Business Plans is the sister site of GT Venture Capital
Circulated by Article Emporium
|
|
