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Finding and approaching companies

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If you want a licensing agreement with a company, you must:

  • Find the right companies to approach.
  • Approach them in the right way.

Finding suitable companies to approach may be harder than you think, because big, well-known companies are often the least likely to want to deal with inventors. 

Many inventors also make the mistake of approaching companies too soon. You should have:

  • Detailed knowledge of the market for your idea.
  • A finished prototype.
  • Evidence that your idea has commercial (not technical) advantages.
  • A well-rehearsed presentation that enables you to seize any opportunity to present that evidence.

Big companies

Many inventors approach only the best-known companies in their target market. Regrettably, very few major companies genuinely welcome external ideas. When they have been rejected by all the big names on their list, many inventors have no idea what to do next.

In fact, there are several reasons why it might be better not to approach big companies at all.

  • Many are so large that they find it inefficient to deal with individuals and very small companies.
  • Most will receive many unsolicited ideas. These are hardly ever regarded as a priority, and so may be automatically rejected.
  • Most will be happy with their existing methods for acquiring new ideas.
  • Even large companies fear litigation from inventors who accuse them of IP theft. The simplest remedy is not to deal with inventors at all!
  • The larger the company, the further ahead they have to plan. It may be impossible for them to do anything with even a good invention for several years.
  • In their terms - turnover measured in hundreds of millions of euros - the return from your invention or product may be too small.
  • In big companies it can take a very long time for things to happen - often too long for an inventor running out of funds.

Smaller companies

Even if your ultimate objective is a licensing agreement with a large company, it may be a good strategy to start with a smaller company. Smaller companies often have more ability to change and innovate quickly, and it is usually easier to reach their key decision-makers.

There are also, of course, many more small companies than large ones, so you should have far more opportunities to pursue.

Furthermore, most large companies are supplied by smaller companies, so your best route to a large company may be through one of their suppliers.

You may be able to find a small company which specialises in your technology area and has resources scaled to the needs of a new product. (For example, manufacturing equipment suitable for relatively low volume production.)

One disadvantage of smaller companies is that they have less money than large companies. They may therefore like your invention and be keen to license it, but may find it just as difficult as you to fund its development.

A possible solution is for you to work in close partnership with a smaller company, so that the burden of development is shared. Information can also be shared, so an inventor working collaboratively with a small company may benefit significantly by being much more aware of what is going on - even if progress is slow.

Another disadvantage is that smaller companies are less well known, so it may be difficult to identify those who might be (a) interested in your invention and (b) capable of doing anything positive with it.

A solution may be to enlist the help of business and technology advisers employed by your local or regional government, whose job it is to be familiar with the small and medium-sized (SME) business sector. They will also know of funding schemes for which your project may become eligible if you join forces with a small business.

(There are also private companies and consultants who offer to arrange business-to-business introductions. Often large fees are charged and it can be difficult to predict whether you will get value for money. It may be sensible to try all available public sector resources first, many of which will be free.)

Identifying companies

In general, you need to find companies of the right size to whom you can offer the prospect of either a larger market share or an improved product range . Your ideal company may be a major company, but a better choice may be a smaller company with ambitions to be bigger.

Make it your task to find out which companies are active in your target market, and how they rank in terms of product range, market share, size and turnover. (A good source of names is a patent database. Focus on patents in a relevant technology area and you may discover among the applicants many more active companies than you previously knew about.)

After analysing all available information about them - perhaps with the help of a professional adviser - you should be able to produce a shortlist of companies to approach. (It may help to start with those within easy travelling distance. A professional adviser may then be more willing to accompany you to any meetings!)

However: no matter how many companies you list, the result may still be a complete lack of interest. If they all reject your invention but your confidence in it remains high, it may be time to start thinking seriously about switching from a licensing strategy to a business start-up strategy.

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