Have you been developing anything in your spare time? Do you plan to use your creation that as a foundational element of your business? Do you have partners in your business? Did you know you can invest your intellectual property in your business? It is worth something. It is the same as money.
Different people bring different things into a business relationship. Some have money, some have ideas, some simply work hard. All of this has a value. One of the most underrated investments in a startup is the intellectual property. I see founders who don’t understand what they have brought to the table in intellectual property be bullied into receiving less equity or forced to put up more money. Did you know you are not required to invest all of your intellectual property into the company?
Intellectual property has a number of rights associated with it. For today, we will focus on giving away your rights versus simply allowing someone to use them. This is known as transferring (giving up all rights) intellectual property or licensing (allowing someone to use permitted rights) the same property. This is something that is not commonly considered when starting a business. Intellectual Property has a value. Sometimes (many times), the intellectual property is worth more than the actual value of other investments of cash or property by other partners. This can lead to an unfair (though likely unintentional) dilution of the one who invested the Intellectual Property.
In this episode we talk about:
- Putting your agreement in writing. Intellectual Property is important to your business, the ownership needs to be clear up front.
- Options for investing intellectual property. We talk about transfers, licenses, and limiting the license for a potential sale later on.
Thinking through the way you invest your intellectual property into your startup is important to make sure you are not “giving it all away” before you know what it is worth. Maintaining the ability to keep your intellectual property provides you some level of insurance that you won’t just lose all of your hard work if the company doesn’t make it because of circumstances outside of your control or of your intellectual property.
Just wanted to give you something to think about this weekend. Keep working on that dream. Keep building your intellectual property, just invest it wisely. You work hard to create intellectual property, just like investors work hard to make money to invest. You should invest it wisely.