Original ideas or inventions are often times all it takes to become extremely successful. These start-up ideas or concepts are constantly being brought to the market through venture capitalists, angel investors, business loans, and many other forms of capital acquisition. If you are currently seeking a means to fund your project or business, it is extremely important that you understand the differences between starting a venture and licensing your product or idea. Protecting your intellectual property is always the top priority, but taking care to avoid any agreement that might place you on the losing end of things is a very close runner-up.
Put simply, a licensing agreement is essentially a deal in which you allow a company or manufacturer to create and/or distribute your product on your behalf for a given amount of time, whereas a joint venture allows for the creator or original rights owner to maintain full control of their project with the funding provided by their investors. Either type of partnership agreement might come into play depending on your specific situation and available investors, so you should be prepared to discuss any applicable possibility before serious discussion with any potential investor or venture capitalist.
In addition to licenses and ventures, there are also assignments which involve the permanent transfer of ownership and manufacturing rights of an invention to another party in exchange for a lump sum or periodic royalty payments, a similar system to that of a license. Without the proper clauses included in contracts signed by both parties, a license agreement can ultimately be identical to any assignment - these two terms are occasionally even used interchangeably.
Many consider a licensing agreement of any sort to be an extremely dangerous and difficult contractual agreement that will require plenty of legal know-how from all parties involved. If you consider yourself to be inexperienced in business of the level you are aiming for, or don't currently have the financial backing to hire legal assistance, be sure that you never act too fast with a licensing agreement. A legal adviser or agent will prove very helpful during negotiations, but a firm understanding of the potential of your invention and the type of agreement that your invention warrants can take you quite far in your dealings with investors.
Licensing agreements are quite flexible and can be altered to fit the specific needs of the licensee or licensor. A licensing agreement can be drafted to only extend over a certain period of time or only in a certain country or region. Agreements can even be made to allow the licensing of your invention to multiple manufacturers or licensees. Considering that "your invention" might refer to any innovation, device, or process, the ways in which a licensing agreement might be customized is endless. During the initial meeting and conversations with potential licensees, ask questions to help you gain a better understanding of your potential investor's possible needs as well as their point of view on the matter as a whole.
As previously mentioned, any venture agreement is essentially a partnering of inventor and investor in which the investor provides the inventor with the necessary funding in exchange for either an established reimbursement/reward or joint ownership. The level at which your venture agreement will function can vary quite a bit - regardless of the size of the investment, even if it's just enough to make a few improvements to the current progress or presentation of your invention, could still certainly be considered a venture agreement of some form.
Venture agreements can be entered into by both angel investors and venture capitalists. Angel investors (either as an individual or a small collective group) tend to focus on businesses in their early stages, while venture capitalists are a much more difficult scenario entirely and usually focus on businesses who already hold some credibility or stature. Angel investors will almost always be much easier to negotiate with - in a situation where you have various investors that all demand their own terms be met it might prove rather difficult, but otherwise angel investors tend to be the most effective sources of achieving capital or start-up funding.
Put simply, a licensing agreement is essentially a deal in which you allow a company or manufacturer to create and/or distribute your product on your behalf for a given amount of time, whereas a joint venture allows for the creator or original rights owner to maintain full control of their project with the funding provided by their investors. Either type of partnership agreement might come into play depending on your specific situation and available investors, so you should be prepared to discuss any applicable possibility before serious discussion with any potential investor or venture capitalist.
In addition to licenses and ventures, there are also assignments which involve the permanent transfer of ownership and manufacturing rights of an invention to another party in exchange for a lump sum or periodic royalty payments, a similar system to that of a license. Without the proper clauses included in contracts signed by both parties, a license agreement can ultimately be identical to any assignment - these two terms are occasionally even used interchangeably.
Licensing agreements are quite flexible and can be altered to fit the specific needs of the licensee or licensor. A licensing agreement can be drafted to only extend over a certain period of time or only in a certain country or region. Agreements can even be made to allow the licensing of your invention to multiple manufacturers or licensees. Considering that "your invention" might refer to any innovation, device, or process, the ways in which a licensing agreement might be customized is endless. During the initial meeting and conversations with potential licensees, ask questions to help you gain a better understanding of your potential investor's possible needs as well as their point of view on the matter as a whole.
Venture agreements can be entered into by both angel investors and venture capitalists. Angel investors (either as an individual or a small collective group) tend to focus on businesses in their early stages, while venture capitalists are a much more difficult scenario entirely and usually focus on businesses who already hold some credibility or stature. Angel investors will almost always be much easier to negotiate with - in a situation where you have various investors that all demand their own terms be met it might prove rather difficult, but otherwise angel investors tend to be the most effective sources of achieving capital or start-up funding.
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