April 22, 2011

Inventors Requirements For Licensing or Venture Agreements of Any Sort

If you are the owner or inventor of any process, invention or intellectual property of any sort that you believe could generate substantial profit if placed on the market, it is important that you prepare and inform yourself in every way possible if you truly want to be a success. In most cases, your original idea or concept is similar to something that is already on the market, so there will undoubtedly be plenty of research to be done in an effort to understand the costs of manufacturing, advertisement or anything else that might apply to your particular idea or invention.

All of your research and information will be compiled into a complete business plan that covers every predictable or assessable aspect of your intellectual property or invention. The length of a business plan can span anywhere from a couple pages to a couple hundred pages complete with images, charts, and many other advanced features. If your looking for a company to invest millions of dollars in a venture agreement that would put you in charge of your own operation, you can't expect a couple of pages to impress anyone during your presentation.
There are many factors to consider when trying to assess the commercial potential and cost of any idea. A good place to begin is by assessing the complete costs and potential of your product: how much money will your product make and how long will it take? When determining the amount of money you will have to spend to get your business or invention off the ground, be sure to include potential cost of advertising, employment, manufacturing, and any other expenses. A good way to begin is by researching competition or previous products already in existence to determine exactly how much it will realistically cost you altogether. If your invention is not able to be protected legally, a much larger amount of money will have to go into advertisement and marketing to maintain a solid sales base.

While the expenses of your invention might be rather easily determined, assessing the commercial potential or revenue that your idea will be able to generate can be very difficult for an inexperienced inventor. The first place you will likely have to look is towards your competition. Develop a competitive pricing system that would do well against any similar product and clearly explain it in your business plan. Make note of the amount you intend to allocate towards marketing and the projected sales increases you might receive based on demand and strategy. If you are unsure of the demand that your product might have, there are a few simple questions you can ask yourself about your idea:
  1. Would this invention or idea fit into the lives of it's customers well?
  2. Is there already a similar service that customers who need such a service or product might use instead?
  3. Is your idea easily marketable?
  4. Does it clearly fill a void or improve the way in which something is currently handled? (is there a need for it?)

Depending on the level of legal protection you are currently able to acquire for your invention, speaking with and selecting potential investors or venture capitalists can be a very dangerous process in terms of protecting and disclosing your trade secrets. Unfortunately this is one part of becoming a successful inventor that can almost never be avoided - unless you plan on funding your project entirely by yourself, you are going to need to speak with and convince an investor of the potential in your invention, process or idea. Any inventor would ideally want to license their invention or go into a venture agreement with a firm or business that is familiar in that particular field and will be able to provide you with much more than funding.
  • The ideal investor candidate will bring much more to the table than a lump sum of money. You want your investor to honestly believe in and be involved in some way with the project as a whole. Be weary of passive investors who want to do nothing more than loan you the necessary financing for a set period of time: you will be required to quickly learn huge amounts of business knowledge for yourself without the appropriate backing from your more experienced investor.
  • Any investor you deal with will conduct business rather professionally, especially if your project requires any substantial amount of funding. They should not sound like a salesperson - if you feel as if your investor is excessively eager to begin, or already claims to be willing to provide you with the necessary funding before reading any formal business plan or executive summary, it is likely that this investor is not legitimate at all. If you are unsure, don't be afraid to ask as many questions as you feel necessary about their company background or personal portfolio to determine if they actually want to help you.

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