I’ve always loved working on the cutting edge of technology. I started my first business when I was 26 called Bacchus Entertainment Ltd. With that company, I was responsible for signing some of the first online rights for feature films and also participated in the inaugural online streaming of the Cannes Film Festival in 1997. I learned early on through this venture and others that developing multiple diverse avenues for your business to reach new markets can fast-track commercialization and prove the technology more quickly, which helps to generate investment and growth.

Licensing your proprietary technology can be a great way to do this. A license is essentially a contract that allows a third party to use specific intellectual property without transferring ownership, allowing the owner of the IP to earn fees or royalties. Aligning your incentives with and licensing to other businesses can offload some of the business development responsibility and allow you to leverage these partners to grow your bottom line.

Why License?

When a new technology has the ability to disrupt an entire industry, it can be an uphill battle to commercialize it. This is where licensing can come into play. Both Intel and Qualcomm have historically licensed the use of their chips to Apple as a component in iPhones, and although this is not highly publicised, it allows Apple to leverage existing technology, which tends to be more cost-effective than in-house research and development and provides a new commercialization opportunity for both Intel and Qualcomm. And typically, the organization licensing the technology is responsible for the costs of marketing, selling and distributing the final product.

When Tesla announced that it would allow other companies to use its patents without IP agreements, it seemed crazy. Why would Elon Musk and Co. let other companies use their proprietary technology? However, this move actually enabled an entire industry (electric cars) to evolve more quickly, increasing the amount of electric vehicles on the market and consequently increasing demand for electric vehicle infrastructure, which then, in turn, helped increase demand for electric vehicles. As they say, “A rising tide lifts all boats.”

How To Find The Right Commercialization And Licensing Partners

It is so key to ensure that you work with the right partners because licensing also involves a number of risks. The transfer of proprietary technology may weaken a company’s competitive position or dilute its brand. I have made a point of mitigating this risk in some of my most recent ventures by focusing on diversifying through licensing deals and acquiring a stake in each of the companies. These deals have provided the flexibility to enter new markets while offloading the marketing, sales and other related activities to teams with specific domain expertise.

Entering new industries is an excellent use case for this because developing a network, product knowledge, customer knowledge and other key areas of expertise can be time-consuming and resource-intensive. To go from servicing restaurants to servicing the high-growth legal cannabis industry, takes a wide range of specialized knowledge and contacts.

Entering new geographic markets is also an excellent use case for licensing. Language, culture, buying habits and other unique characteristics can be barriers to entry for foreign technology firms. Licensing a product can make it much easier to commercialize in new geographic regions. In order to protect your firm’s IP, you should consult with an IP lawyer before engaging in licensing deals.

Think Big And Keep An Open Mind

Keep innovating and keep an open mind as to how your technology can be used. By inviting others to build upon your solution, your IP can become the industry standard.

I always encourage entrepreneurs to think bigger. Envisioning your lofty goals from the outset will put you in a much better spot than starting small. View things from a global scale to open up more opportunities for growth and revenue. This approach rang true with my first business when I was licensing film content. We boosted our revenue beyond what we could have done on our own in Canada regarding distribution by incorporating international territory rights.

Commercializing new technology with a sound licensing strategy can accelerate growth by allowing it to reach new markets and verticals more effectively.

Originally Posted: Forbes
Penny Green, Forbes Council