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Business Plan 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 a 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 patch retentive
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 necessarily 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 Consumer
Necessarily and the Relevant Market Size: The business plan must as well discuss how the benefits of the IP fulfill a large consumer
need. To accomplish this, the plan necessarily to detail consumer
wants and necessarily and prove that the company’s offerings specifically meet these needs.
Secondly, the plan necessarily to discuss the marketplace in which the IP is offered and the size of this marketplace. Critical to this analysis is deciding 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 aid market, but rather the sales of all competitory
medical devices.
Focus on Competition and Competitive Differentiation: Your business plan must as well prove that your IP is better than competitive inventions. In characteristic competitors, note that listing no or few competitors has a negative connotation. It implies that there may not be a large enough consumer
need to keep the company’s products and/or services. On the different hand, should there be too many a competitors, then the market may be too saturated to keep the gain of a new entrant. The answer -- any institution that as well serves the consumer
necessarily 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 consumer
niche.
Prove that you can Execute on the Opportunity: As significantly
as proving the quality of the IP and that a brobdingnagian 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: Deed Investors to Sign the NDA: If you are able to persuade the prospective capitalist
that the IP is integrated into a product/service which yields real consumer
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 language an NDA would-be be appropriate.
Just about the author:
GT Business Plans has developed over 200 business plans for clients that have conjointly 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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