What you need to know before you grow

If you’re in the early stages of your business, it’s time to consider your commercialisation options. While intellectual property (IP) protection is important, an IP right doesn’t sell itself. You should have a commercialisation strategy in place for how you will make money from your IP.

Your commercialisation journey

There is no one journey start-ups or businesses should take, but we provide easy to digest information on how to commercialise your IP and what you should consider during your commercialisation journey.

Understand commercialisation

Commercialising IP is about getting your products or services into the market. Here are some common commercialisation terms you should know:

Commercialisation pathway

Commercialising a new product or service is typically a journey of many steps comprising a ‘route to market’ or ‘commercialisation pathway’. Several steps may be taken simultaneously, some may be skipped, and some repeated. The most appropriate steps and their best sequence require careful consideration as they depend on the specific IP involved.

Commercialisation strategy

The ‘commercialisation strategy’ is the overall plan of action designed to achieve the long-term aim of the commercialisation venture. It guides and interacts with the considerations involved in choosing the commercialisation pathway.

Commercialisation vehicle

The ‘commercialisation vehicle’ refers to how the legal rights to the IP will be held and conveyed. Examples of commercialisation vehicles are licensing and franchising.

Decide how to source and protect your idea

Not all IP ventures arise from the IP that was created and owned by one of the venture participants and there’s different ways to source and protect an idea. Often IP ventures can develop from collaboration between a research and development (R&D) organisation (the IP source) and a funding business.

If your IP strategy includes legally protecting your idea, brand, design or even the application of your idea, it’s important to understand the different forms of IP legal rights.

You can maintain secrecy with non-disclosure agreements (NDAs), also known as confidentiality agreements.

Review the IP background: due diligence

Due diligence precedes the creation of a business plan. If the venture proceeds, much of the work conducted during due diligence may contribute to the plan.

The following issues should be resolved:

  • IP definition: Exactly what is the IP? How does it differ from, or improve upon, what’s come before?
  • IP ownership: Who really has rights to use the IP?
  • IP preliminary valuation (‘validation’ or ‘risk validation’): Does the IP have sufficient commercial usefulness to warrant reasonable expenditure on its commercialisation?

Choose your commercialisation vehicle option

If due diligence indicates the proposed venture can proceed with acceptable confidence, a next step is to determine how legal rights to the IP will be held and conveyed during commercialisation. The types of vehicle options to this include:

  • Selling your IP
  • Direct in-house use of your IP
  • Setting up a start-up or spin-off
  • Licencing your IP to others
  • Setting up a franchise
  • Mergers and acquisitions (M&As)
  • Beginning a joint venture (JV).

Choose your business structure

A business structure is a legal entity. Business.gov.au can help you decide which business structure best suits you needs. In Australia the following main choices exist:

  • Sole trader
  • Partnership
  • Private company
  • Public company
  • Trust

Decide how to fund your idea

There are two golden rules when seeking funding for your venture (in particular for IP ventures due to their novelty):

  • Never proceed underfunded
  • Allow for contingencies.

Private venture capital (VC) companies can be a source of funding and are generally characterized as high-risk/high-return opportunities with strong growth potential.

‘Business angels’ are affluent individuals who provide capital for start-ups in exchange for equity or an inflated profitable return on their loan (‘convertible debt’).

There are also a number of Government grants and funding programs available to assist Australian businesses to develop and commercialise their IP. Business.gov.au has a comprehensive list of these grants and programs, including:

You can also raise funds through crowdfunding, the practice of funding a venture by raising relatively small cash contributions from a large number of people, usually done through a crowdfunding website such as kickstarter.com. If you’re considering crowdfunding, it’s important to consider how you are protecting your idea before launching your campaign.

Finalise your commercialisation plan

The commercialisation plan is an essential tool to:

  • Clarify and validate the opportunity
  • Guide the progress of the venture(comprehensively but flexibly)
  • Assist in securing the support of funders and other participants.

Many commercialisation plan templates are available online and may be useful, but all will require some adaptation to suit the particular characteristics of each unique IP venture.

Take your IP global

If you’re planning to enter a global market, you should consider where you would generate the best returns and whether you have the resources to successfully commercialise in, and supply to, countries outside of Australia.

Before entering a foreign market, it’s important to ensure your IP is protected in the relevant country.

It’s also important to understand IP protection in the country you would like to establish your market position in order to ensure you don’t infringe on existing IP in that country.

More information

Published: 
21 April 2017

Add new comment