Describing Intellectual Property in Your Business Plan

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 ventures face, however, is that most investors will 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 investor attention while retaining 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 the most amazing of technologies will not excite investors unless it has tangible benefits to customers.

The business plan first needs to discuss the products and services into which the IP will be integrated. It then must detail the benefits that these products and services have to customers and differentiate them from competitive products. When applicable, it is helpful to include non-confidential drawings and backup materials of the products and services in the Appendix.

Focus on Customer Needs and the Relevant Market Size: The business plan must also discuss how the benefits of the IP fulfill a large customer need. To accomplish this, the plan needs to detail customer wants and needs and prove that the company's offerings specifically meet these needs.

Secondly, the plan needs to discuss the marketplace in which the IP is offered and the size of this marketplace. Critical to this analysis is determining 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 not be the trillion dollar healthcare market, but rather the sales of all competing medical devices.

Focus on Competition and Competitive Differentiation: Your business plan must also prove that your IP is better than competitive inventions. In identifying competitors, note that listing no or few competitors has a negative connotation. It implies that there may not be a large enough customer need to support the company's products and/or services. On the other hand, should there be too many competitors, then the market may be too saturated to support the profitability of a new entrant. The answer -- any company that also serves the customer needs that you serve should be considered a competitor.

The business plan should detail both 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 customer niche.

Prove that you can Execute on the Opportunity: As importantly as proving the quality of the IP and that a vast market exists for its applications, the business plan most prove that the company can successfully execute on the opportunity.

The plan should detail the company's past accomplishments, including descriptions and dates when prior funding rounds were received, products and services were launched, revenue milestones were reached, key partnerships were executed, etc.

When a company 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: Getting Investors to Sign the NDA: If you are able to convince the prospective investor that the IP is integrated into a product/service which yields real customer benefits in a large market, then the investor will take the quality of the invention for granted when reviewing the plan. Later, during the due diligence process, the investor will review the actual technology. At this point, a discussion regarding signing an NDA would be appropriate.

Since its inception, Growthink Business Plans has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. For more information please visit http://www.growthink.com

In The News:

Australia to buy LRASM; Unveils Strategic Plan  Aviation International News
Strategic Planning Fundamentals | Penn Today  Penn: Office of University Communications
Council adopts LSPS  Central Coast Community News

Writing Your Business Plan is Actually Storytelling

Storytelling and writing a business plan actually go hand in... Read More

What is a Shared Vision?

So what makes a vision successful? Everyday companies try to... Read More

Corporate Venturing For Emerging Growth Companies

The boom of the dot-com era in 1999 brought the... Read More

Offense: Beat the Odds

When in doubt, cut that out! Yeah, yea, doubting Thomas... Read More

Connecting Your Offline Business to Your Online Business

These may sound like no brainers, but you'd be surprised.... Read More

Six Key Principles of Corporate Accountability

The foundation of any business transaction is the promise of... Read More

Executive Summary for Business Plans of Franchisees

Writing a business plan for a franchised outlet of a... Read More

How to Grow Your Business by Clearing the Way to Growth

Is your business growing as fast and effectively as it... Read More

Have You Identified the Enemy?

One of the most powerful driving forces in human nature... Read More

Cost-cutting Essential to Maintaining Profits

Why cut costs now? Efforts are multiplying to cut costs... Read More

Sony?s PSI Project

In 1989, Sony founded its Institute of Wisdom at the... Read More

How to Write a Business Plan in Five Steps

People often ask "What makes a good business plan? Or,... Read More

During the election we heard about Ohio?s Economy

Much of what we heard in the mass media about... Read More

Dayton, OH; Why your Company needs to expand there

In Ohio: besides the 3-Cs you should look at Akron,... Read More

Don?t Allow Yourself to Get Burned

I am not a big fisherman, but I do enjoy... Read More

GOT MEME? How to Attract Your Clients and Customers Attention

No "meme" isn't a typo and Got Milk, the more... Read More

Alice In Wonderland - A Parable for A Business Plan

Remember reading "Alice in Wonderland?"She asks the Cheshire Cat, "which... Read More

Resilience

I. INTRODUCTIONThe term resilience, which is of frequent use in... Read More

Memo: Sustaining Growth in Your Business

What gets measured gets done.How do you keep your business... Read More

Business Problem Solving

Is there really anything as a problem? Does chaos or... Read More

Urban Flight in Ohio

Many of Ohio's downtown areas are in need of upgrading... Read More

Questions to Ask Yourself When Starting a New Home Business

I love the excitement of starting up a new home... Read More

How to Snuff Out the Competition Without Leaving a Mark

Does the competition drive you crazy?Are they relentless about taking... Read More

A Backup To The Internet Is Vital & Now Cost Effective

It doesn't take a Terrorist Act, Tsunami or Earthquake to... Read More

Bounced Checks in Your Business Location Outlets

The new check cashing instant clearing will take some time... Read More