“Licensing vs. New Venture” – The Anatomy of a Start-Up Event Recap

We were happy to be invited to a wonderful event sponsored by the Licensing Executives Society – Silicon Valley Chapter and the Chamber of Commerce International Consortium for Entrepreneurs and held at TechLAB Innovation Center.  At the event, we heard from Larry Udell, Founder of the California Invention Center, who has 60+ years of hands on experience in creating over 40 companies.  During the presentation we heard him speak about the comparisons between starting your own business (new venture) and licensing as well as what is required in preparing to be successful.We have included some helpful information and some questions that one may want to consider when starting their own business (new venture) or licensing.The first thing you should do if you are considering starting your own business or licensing, is do your homework and research.  You cannot afford to be wrong as either path may require outside funding as well as your own.  Some questions you may want to ask yourself are: What will you have to give up for the money you will be spending on this new venture (house payments, tuition, grocery’s, etc)? How badly do you want to run it and be the boss?  If you are going to do a licensing deal, what do you realistically want?Once you figure our the answers to those questions.  You may want to compare the two routes to not only see what works best for you, but also your family and your product.  Things to consider:Licensing:

1. Who are your competitors?  How big is the total market?
2. Will it withstand critical value? If people are critical of your product, are you going to be able to handle the feedback?
3. Why is your technology, product, etc. better then what is out there?

New Venture:

1. Are you going to product your product in the US or overseas?  Are you going to have inventory in stock?
2. What about marketing, packaging, distributing, and selling?  Do you have the skills and know how that is required?
3. Do you have a detailed business plan?

Other things to keep in mind.Licensing:

1. I will have a smaller team (myself and a professional negotiator).
2. I will be putting in a smaller investment and so must prepare for less income.
3. Will I be putting all my eggs in one or a few baskets?
4. I will have less control, but with more of a guarantee.

New Venture:

1. The money earned is going to be greater, but I will be investing more time and money.
2. If I have a big team, I will need to share the success.
3. What is this going to cost me (sales & marketing)?  What will I get in my pocket at the end of the day?
4. I will have more control, but no guarantee

Thinking of starting a new venture or licensing is not something you want to take light-hearted.  You don’t only need a solid team, but you will also need the support of your family and close friends.  You also  need to consider what are the financial requirements and can you survive without a paying job if you take this on full force?  No matter which route you chose, if you believe in your product, your business, yourself then the sky is the limit.