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Bankruptcy InformationDescribing 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 and the management team are often the two most important aspects of a venture capitalist’s investment decision. The challenge that many an ventures face, however, is that most investors wish not sign non-disclosure agreements (NDAs), and 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 capitalist
attention spell holding the confidentiality of your inventions.
Focus on the Benefits of and 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 as the most amazing of technologies wish not excite investors unless it has tangible benefits to customers.
The business plan 1st of necessity
to discuss the products and services into which the IP wish be integrated. It then must detail the benefits that these products and services have to customers and differentiate them from competitive products. Once
applicable, it is helpful to include non-confidential drawings and backup materials of the products and services in the Appendix.
Focus on Client Of necessity
and the Relevant Market Size: The business plan must likewise discuss how the benefits of the IP fulfill a large client need. To accomplish this, the plan of necessity
to detail client wants and of necessity
and prove that the company’s offerings specifically meet these needs.
Secondly, the plan of necessity
to discuss the marketplace in which the IP is offered and the size of this marketplace. Critical to this analysis is decisive 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-be not be the trillion dollar attention market, but rather the sales of all competitive medical devices.
Focus on Competition and Competitive Differentiation: Your business plan must likewise prove that your IP is better than competitive inventions. In distinctive
competitors, note that listing no or few competitors has a negative connotation. It implies that there may not be a large enough client need to keep the company’s products and/or services. On the else hand, should there be too many an competitors, then the market may be too saturated to keep the profit
of a new entrant. The answer -- any institution that likewise serves the client of necessity
that you serve should be considered a competitor.
The business plan should detail some
the positive and negative aspects of competitors’ IP and products/services and validate that your offerings are either superior in general, or are superior in serving a specific client niche.
Prove that you can Execute on the Opportunity: As significantly
as proving the quality of the IP and that a immense market exists for its applications, the business plan most prove that the institution can with success
execute on the opportunity.
The plan should detail the company’s past accomplishments, including descriptions and dates once
prior funding rounds were received, products and services were launched, revenue milestones were reached, key partnerships were executed, etc.
When a institution is a complete start-up, and 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: Effort Investors to Sign the NDA: If you are able to win over
the prospective capitalist
that the IP is integrated into a product/service which yields real client benefits in a large market, then the capitalist
wish take the quality of the invention for granted once
reviewing the plan. Later, during the due diligence process, the capitalist
wish review the actual technology. At this point, a discussion regarding linguistic communication
an NDA would-be be appropriate.
Just about the author:
GT Business Plans has developed over 200 business plans for clients that have put together raised over $750 million in financing, launched many
new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital
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