I’ve been thinking recently about deals. Well, obviously, we’re almost always thinking about deals! But specifically, I’ve been thinking about those deals that seem to fall into your lap. The bird-in-the-hand deals certainly can save time and marketing resources. And sometimes they make sense given the specifics of the technology, as we’ve blogged about previously. But sometimes the quick deal that seems to make sense at first blush is not the way to go.
Case in point: One of Fuentek’s clients (prior to engaging Fuentek), operating in reactive mode, had executed an exclusive license with a technology’s co-inventor, who owned a small business. Unfortunately, the small business had met with limited success. Some royalties had been paid, but certainly not a windfall.
Then, while proactively marketing a related, unlicensed technology (developed by another co-inventor of the original technology) Fuentek turned up the 800-pound gorilla in the industry—a powerhouse that was incredibly interested in licensing the original technology. This company no doubt would be successful and would generate a much larger royalty stream than the small business licensee. But to take advantage of this bigger deal, our client is now faced with having to terminate the original license or convince the licensee to change their terms.
Now, don’t get me wrong. There are plenty of technologies for which the deals that emerge from the development process make total sense. But, in some cases—such as when the technology might have applicability to many industries—a more proactive and strategic approach is definitely called for.
When considering a bird-in-the-hand offer, keep these questions in mind:
1. Do you have a solid understanding of who the top prospects are in all application areas for the technology and an understanding of royalty potential in each market? (This is something you can begin to understand on at least a preliminary basis through a technology screening.)
2. Are there other well-qualified prospects beyond the bird in your hand?
3. How does this bird compare with the industry leaders? And what might you be giving up by not licensing to one of the industry leaders?
What has your experience been? We’d love to continue the conversation, so feel free to contact us or leave a comment below. Oh, and also, we’re gearing up for new webinars in the fall that will focus on this idea of proactive marketing. So stay tuned, or sign up to be on our mailing list for webinar announcements!