The benefits of licensing for startups.

Startup founders need all the tools at their disposal to successfully launch and grow their business. One of those tools is a clear understanding of how the licensing business model can be used to support their goals, including speed to market and the filing of investor-friendly intellectual property.

The concept of licensing has been around for a very long time. The inventor of the first patented technology - Samuel Hopkins, in 1790, for a new method of making potash and pearl ash - licensed it to a local businessman the following year, says historian Arthur Daemmrich at the Lemelson Center for the Study of Invention and Innovation.

Basically, one party (the inventor or artist) grants another party (usually a company) the right to produce and sell something it has created.

As far as I know, most startup founders aren't very familiar with the concept of licensing a product in the marketplace. Adventure - the traditional method of bringing a product or service to market - gets all the glory. It makes sense: you do everything yourself.

The license can be an alternative to the adventure, but it can also be completely complementary. Here are six major benefits that an understanding of product licensing offers startup founders.

1. If you're extremely creative and have lots of ideas, you don't have to pick just one.

Starting a new business to market every one of your ideas is not practical. Anyway, some ideas are not suitable for growing a business. If you develop an understanding of how the licensing process works, you won't have to give up or shelve your new product ideas because licensing takes much less time than getting started.

2. Reduced risk and expense.

Most startups don't have the funds, time, and/or experience they really need to launch a successful new product or service. When you license your technology to an established company, that company and its myriad resources become your partner. You no longer need to establish your own supply chain, retailer relationships and marketing department, for example. This reduces your expenses, which reduces risk.

Licensing is especially useful for startups whose technology will be expensive to develop and implement.

3. You can get to market faster.

Speed ​​to market is more relevant than ever.

"All things being equal, the fastest company in any market will win. Speed ​​is a defining characteristic, if not THE defining characteristic, of leadership in virtually any industry you look at," says Dave Girouard , founder of Upstart and former president of Google Enterprise.

One of the main benefits of licensing is speed. Beating others in the market and becoming the original in the eyes of consumers is a great form of protection. A good licensee will have the resources to bring your product or service to market at scale much faster than you could on your own.

If you are just starting out and do not have any IP, you should consider licensing the IP to a third party. This is a much faster way to acquire IP, as patents take at least two years to issue.

“Licensing the rights to a proven product or technology shortens the time to market. Rather than spending your time and money on R&D, you focus your resources on 'bringing intellectual property to the commercial market,' explains the Licensing Consulting Group.

There are many places to look for IP to commercialize, from research universities to companies that license their IP. Like obtaining a patent, a license to use intellectual property will be attractive to investors.

4. You can generate additional revenue and use it to fund your innovation...