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

---

Art of Succession Planning

Succession planning, like any business acumen, is both an art... Read More

Microsoft Great Plains Implementation: Healthcare/Hospital example ? overview for consultant

Microsoft Great Plains fits multiple services market niche and healthcare... Read More

City of Cortez and South Western Colorado Market Survey

We have been spending many hours surveying the market for... Read More

College Students and Graduates to Run Company Outlets or Franchises

Does your overall business strategy include the recruitment of college... Read More

Executive Summary for Business Plans of Franchisees

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

A Rough Cut on Feasibility

A piano tuner recently moved to Buffalo, NY, and would... Read More

How To Leverage Your Current Ideas And Products Into Multiple Revenue Streams

Diversify - to make diverse, give variety, to balance, to... Read More

10 Critical Facts to Put On the Cover of Your Business Plan...

In most business plans, no matter how striking the idea,... Read More

Be Like Bill - Think!

Twice a year, Bill Gates goes to a remote island... Read More

Thinking Like A Farmer

One of the difficulties we face in our industrialized age... Read More

Business Plan Financial Projections: Stop Worrying About Being Right...

Business plan financial projections seem daunting because they are so... Read More

Is Plan B Ready?

Business owners and entrepreneurs are, by nature, risk takers and... Read More

Connecting Your Offline Business to Your Online Business

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

Secrets Of Effective Brainstorming

Have you been in a "brainstorming" session where each person... Read More

Expanding your business in a franchise system

If you are a successful franchise of a large franchise... Read More

Business Plan: Planning the Operations

Writing a business plan is no easy task, sure you... Read More

Top 10 Tips to Create A Business Plan! (For People Who Hate Business Plans)

One of the key challenges for any business is to... Read More

Own Your Niche by Building a Niche Community

In 1997, David Steele was making the transition from a... Read More

Business Problem Solving

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

Advice To Manufacturers Creating A Business Plan

If you are a manufacturer wanting to use your business... Read More

Consolidation in the Software Industry is Hardly New: Obsess About It or Risk Losing it All

Some analysts credit [Larry] Ellison with anticipating the consolidation in... Read More

Family and Friends Referrals Make the Best Franchisees

As a franchisor it is imperative that you seek, find... Read More

Business Plan 101 How to Write a Table of Contents

No matter what business you plan to start in your... Read More

Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy

American Eagle Outfitters and Wet Seal Stores have issued statements... Read More

Fail to plan... or Plan to FAIL??

Running a business, whether it be an offline multi-billion dollar... Read More

Online Promotion: 10 Ways To Use Focus Groups To Ignite Your Profits

A focus group is a group of employees or current... Read More

TQM Total Quality Management, the book

Every decade we seem to come up with a buzz-word... Read More

Will and Vision

Remember Chux? The disposable diaper that took the market by... Read More

Your Business: Will It Have A Happy Ending?

"Begin with the end in mind," says Stephen Covey in... Read More

Is Your Company Growing Fast Enough for You?

Are you frustrated by the lack of growth in your... Read More

Becoming Wise - Wild & Free - Writing A Successful Business Plan - Part 2 - Do It In Steps

So you've decided to write your own business plan because... Read More

Restaurant Startup - Part 1: Market Research ? What are Potential Competitors Doing?

The first step in starting a restaurant is proper planning.... Read More

Strategy Without Tactics is Futile

From time to time there seems to be a flurry... Read More