Most deserving companies that can raise venture capital have proprietary intellectual property. The quality of the IP and the management team are the two most important parts of a venture capitalist's investment choice. The challenge that many ventures have is that most investors wonít sign non-disclosure agreements (NDAís) that are crucial to keeping the proprietary character of the IP. This article will give you the right strategy to address the proprietary IP in your business plan and attract investors while keeping the confidentiality of your inventions.
Concentrate on the Good Aspects of the Application of the IP: The business plan should not disclose the confidential areas of the IP. However, it should talk about the benefits of the IP. Even the most extraordinary technologies will not entice investors unless it has concrete benefits to customers.
The business plan needs to talk about the products and services the IP will incorporate. Then it has to point out the benefits of the products and services for the customers and distinguish them from competing products. When possible, it is helpful to add non-confidential drawings and back-up materials of the products and services in the Appendix.
Cover Customer Needs and the Market Size: The business plan must also discuss how the benefits of the IP satisfy a large customer base. To bring this about, the plan needs to detail the customerís wants and needs and prove the company's conditions meet those needs.
The plan needs to talk about the marketplace in which the IP is delivered and the size. The market size is critical to the whole picture. It equals a companyís sales if it were to capture 100% of its niche market. Letís say a medical devices market size would not be in the trillion dollar healthcare market, but the sales of all other medical devices.
Focus on Rivalry and Spirited Differences: Your business plan must prove that your IP is 'the best' in relation to others. When identifying competitors, listing no or few competitors has a negative implication, as it implies that there may not be a big enough customer base for the product/ service. However, if there are too many competitors, then the market could be flooded and be unable to profit a new entrant. So any company that serves customer needs like yours should be considered a competitor.
The business plan has to detail the positive and negative points of the competitors IP (along with products and services) and endorse your offerings as greater in general, or greater in serving a customer niche.
Prove Implementation for the Opportunity: Not only do you have to prove the quality of the IP and the expanding market for its application, the business plan must prove the company can implement the idea.
The plan needs to detail and describe all of the company's past accomplishments - including dates of product/service inception, past funding rounds, revenue milestones and the formation of key partnerships.
When a company is a full start-up (and no milestones are founded) the plan should focus on prior endeavours of the management team as an indicator of the company's potential for success.
How to Get Investors to Sign the NDA: If you can convince a possible investor that the IP comes with the product/service and will build customer benefits in a large market, then the investor will take the quality of the invention as fixed when going over the plan. Further on, during due diligence, the investor will review the technology. Then a discussion about signing the NDA should take place.