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For inventors and managers of research and development (R&D) teams,
prequalification is an essential function prior to the project moving
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NEGOTIATING INNOVATION

For Inventors Who Want to Commercialise their Intellectual Property



Summary of Funding Pre-requisites in Early-stage Commercialization

For inventors and managers of research and development (R&D) teams,
prequalification is an essential function before the project moves from R&D into
early-stage commercialization. Without testing for readiness, any further
investment is going to take on more risk than the project needs. To make sure
your project is ready, I recommend you conduct these four readiness checks
before transitioning from R&D into Commercialization.

Market Validation

The first prerequisite test is market validation, which plays a pivotal role in
determining the viability of these early-stage projects. Here is a summary of
the process of market validation and its significance, addressing key points
that inventors and managers should consider when evaluating their projects.

1. Identifying the Problem: The first step in market validation is understanding
who has the problem your innovation aims to solve. Clearly defining the target
audience allows you to tailor your solution to their specific needs, increasing
the likelihood of market acceptance.

2. Current Solutions: Analyzing how the target audience currently solves the
problem provides valuable insights. By examining existing solutions, you can
identify gaps or areas for improvement that your innovation can address.

3. Cost of Current Solutions: Evaluating the financial aspect is crucial.
Understanding how much the target audience currently pays to solve the problem
helps you determine the pricing strategy for your product or service. If your
solution offers significant cost savings, it becomes more attractive to
potential customers.

4. Purchasing Channels: Identifying where your target audience goes to buy
current solutions provides valuable information on distribution channels. It
enables you to assess existing marketplaces, retailers, or online platforms
where you can reach potential customers.

5. Frequency of Purchase: Assessing the frequency at which customers would need
to buy your product or service is essential for revenue forecasting and
financial planning. Understanding the purchasing cycle helps determine long-term
sustainability and potential market growth.

6. The Cost of Inaction: Consider whether customers have the option to choose
not to solve the problem. Evaluating the consequences and costs associated with
not addressing the issue helps you position your innovation as a valuable
investment.

7. Time and Cost Savings: Quantifying the time and cost savings your product or
service can provide to customers adds compelling value. Highlighting these
benefits when pitching to investors or potential buyers can significantly
enhance the attractiveness of your offering.

8. Supply Chain Considerations: Evaluating how easily you can source the
required parts or materials for your innovation is crucial for scalability and
cost management. A reliable and efficient supply chain ensures smoother
operations and reduces potential bottlenecks.

9. Regulatory Approvals: Understanding the regulatory landscape relevant to your
product or service is vital. Identify the necessary approvals and certifications
needed for compliance. Estimating the time required to obtain these approvals
helps set realistic timelines for market entry.

10. Production Costs: Accurately assessing the cost of manufacturing your
product or providing your service is critical for establishing pricing and
profitability. Understanding production costs enables you to calculate profit
margins and evaluate feasibility.

11. Price Point: Determining what buyers would realistically pay for your
innovation is crucial for successful commercialization. Market research and
competitor analysis help identify price ranges that align with customer
expectations while maintaining profitability.

12. Incentives for Distributors and Advertising: Consider whether there is
enough profit margin for distributors and advertising. Ensuring that potential
partners and marketing channels have adequate incentives to promote and
distribute your product or service contributes to successful market penetration.

In conclusion, market validation is an essential prerequisite for raising
capital and commercialization for early-stage projects. By thoroughly analyzing
the market landscape and addressing the key points outlined above, inventors and
R&D managers can enhance their chances of securing funding, attracting
customers, and successfully bringing their innovations to market.

 

Proof of Concept

Before attempting to start any production, a robust proof of concept (POC) is
crucial. It allows inventors and managers of research and development (R&D)
teams to validate the functionality, suitability, and competitive advantage of
their innovations. Here are the key points:

1. Efficiency and Reliability: A successful POC demonstrates that the innovation
works efficiently and reliably. It verifies that the core technology or solution
functions as intended, meeting the performance expectations set during the
development process. Demonstrating efficiency and reliability builds confidence
in potential investors and customers.

2. Suitable Form: The POC should showcase the innovation in a suitable form.
This includes evaluating the design, user interface, and overall user
experience. It is essential to ensure that the product or service is presented
in a way that aligns with customer preferences and industry standards.

3. Outperforming Current Solutions: A compelling POC demonstrates that the
innovation can outperform current solutions available in the market. By
showcasing superior features, functionality, or performance, inventors can
position their product or service as a viable alternative to existing offerings.
Comparative analysis and benchmarking against competitors are essential to
validate the innovation's competitive advantage.

4. Component Sourcing: Ensuring the ability to source components from multiple
reliable sources is important for supply chain resilience and cost management.
Relying on a single supplier can lead to potential disruptions or price
fluctuations. Diversifying sourcing options mitigates these risks and supports
scalability.

5. Lead Time for Manufacturing: Assessing the lead time required to manufacture
components or products is crucial for efficient production planning.
Understanding the time it takes to procure or produce parts helps in estimating
overall project timelines and meeting customer demand promptly.

6. Protection against Reverse Engineering: Evaluating the vulnerability of the
innovation to reverse engineering is vital. Intellectual property protection
measures should be considered to safeguard the innovation's uniqueness and
prevent competitors from replicating or imitating it. This can include patent
filings, trade secrets, or other forms of legal protection.

Your Proof of Concept (POC) serves as a key prerequisite in the product
development and commercialization process. By addressing the points mentioned
above, inventors and R&D managers can validate the efficiency, suitability,
competitive advantage, and protection of their innovations. A strong POC
enhances the confidence of investors, stakeholders, and potential customers,
positioning the project for successful capital raising and commercialization
efforts.

 

Ownership and Protection

In the qualification process, R&D teams must prioritize ownership and
intellectual property (IP) protection. Establishing clear ownership rights and
safeguarding valuable innovations is crucial for attracting investors and
ensuring the project's commercial success. The following key points that
inventors and managers should consider when evaluating their projects, include:

1. Ownership Agreements: Ensuring clarity regarding project ownership is
essential. Have you established clear agreements between partners or team
members regarding ownership rights and responsibilities? Defining ownership
roles and establishing legally binding agreements helps prevent disputes and
facilitates smoother decision-making processes.

2. Waiver of Rights: If individuals have contributed to the project's
development, it is important to confirm that they have waived any rights or
claims to the intellectual property. This can be achieved through formal
agreements or contracts to ensure that all IP rights are retained by the project
owners.

3. Non-Disclosure Agreements (NDAs): To protect confidential information, it is
crucial to have individuals who have been introduced to the project sign
non-disclosure agreements (NDAs). NDAs help maintain the confidentiality of
trade secrets, technical know-how, and other sensitive information critical to
the project's success.

4. Patenting: Consider whether your innovation is eligible for patent
protection. Patents provide exclusive rights to the inventor, preventing others
from making, using, or selling the patented invention without permission.
Understanding the patenting process and seeking appropriate patent coverage in
relevant jurisdictions strengthens the project's IP portfolio.

5. Geographic Coverage: Evaluate the geographic regions where you have sought or
plan to seek IP protection. Identifying the countries or regions that are
important for your target market or manufacturing operations ensures that you
have sufficient coverage to safeguard your innovation from unauthorized use or
infringement.

6. Copyrights and Registered Designs: Besides patents, consider other forms of
IP protection, such as copyrights or registered designs. Copyrights protect
original works of authorship, such as software code, written materials, or
artistic creations. Registered designs protect the visual appearance of a
product, providing exclusivity and preventing imitation.

These ownership and intellectual property reviews are essential prior to raising
capital and commercializing early-stage projects. By addressing these key
points, inventors can establish clear ownership agreements, protect valuable IP,
and mitigate risks associated with unauthorized use or infringement. A robust
ownership and protection strategy not only attracts investors but also positions
the project for long-term success in the marketplace.

 

 

The Transition Audit

As R&D teams prepare to raise capital and embark on commercialization efforts
for early-stage projects, the final issue they should address is conducting a
comprehensive transition audit. The transition audit helps ensure that all
necessary elements are in place for a smooth transition from the R&D phase to
full-scale production and sales. The team should understand how the transition
audit serves as an essential prerequisite, including:

1. Completion of Development: Before transitioning to the commercialization
phase, it is vital to assess whether the development of the product or service
is completed. Ensure that all key features, functionalities, and performance
targets have been achieved. Conduct thorough testing and validation to confirm
that the innovation meets the desired specifications and quality standards.

2. R&D Department Shutdown and Funding Sales: The transition audit helps
evaluate whether it is safe to shut down the R&D department and allocate
resources towards development, production, sales and marketing activities.
Assess the readiness of the product or service for market launch and ensure that
necessary funding is available to support sales initiatives.

3. Administrative Management: Identify the individuals or team responsible for
managing administrative tasks during the transition. Determine who will oversee
operations, finance, human resources, and other administrative functions to
ensure smooth day-to-day operations of the business.

4. Sales and Marketing Strategy: Develop a comprehensive sales and marketing
strategy to effectively promote and sell the product or service. Identify target
markets, establish pricing strategies, and outline marketing channels and
tactics to generate customer awareness and drive sales.

5. Contractors for Legal and Accounting: Consider engaging contractors or
consultants specialized in legal and accounting services to ensure compliance
and financial stability during the transition. These professionals can assist
with legal agreements, intellectual property protection, financial management,
and tax obligations, without the heavy burden of fixed salaries.

6. Agreements with Suppliers and Distributors: Establish agreements with
suppliers and distributors to secure the necessary resources, materials, and
channels for production and distribution. Negotiate favorable terms and ensure
that the supply chain is robust and reliable to meet market demand.

7. Branding, Packaging, and Security: Evaluate whether branding elements,
packaging designs, and security measures are in place. Branding helps
differentiate your product or service in the market, packaging enhances product
appeal and functionality, and security measures protect against counterfeiting
and unauthorized use.

Conducting this transition audit is a crucial step in the capital raising and
commercialization process for early-stage projects. By addressing these points,
inventors and R&D managers can ensure a seamless transition from R&D to
full-scale production and sales. A well-executed transition audit helps mitigate
risks, optimize operations, and position the project for success in the market.

If you have covered off all of the points above, your project should be ready to
transition from research development into early-stage commercialization. This is
an important step towards generating cash flow for your project. The first cash
generating transaction that you complete, well remove most of the risk of your
project going forward.

As your project achieved cash flow, you get more options opened up to you and
your team in terms of product variance, market opportunities distribution
opportunities and even licensing opportunities. Part of the transition audit
would include and an assessment of how well the project fits your corporate
objectives if you are developing this intellectual property from within a
company.

In future articles, I will discuss the compatibility factors and how we trade
sale or license those that aren't a perfect fit. In the meantime if you are
worried about whether your project is mature enough to transition, I have a free
tool available called the commercial readiness checklist. 

This takes about 3 minutes to complete and will generate a six page report for
you on how ready your project is. It writes projects on a percentile with the
tipping point being around 40%. If your project is 41% or above, I can suggest
you will have success with transitioning to early-stage commercialisation. If
your score is below 40%, you can drill down the report and see where you're
project is lacking. 

This does not mean your project is not commercial, but does mean that you need
to spend a little bit more time fixing the problems that this report will
identify for you. 

The report is available at https://innovationsuccess.scoreapp.com/

 

Book a Free Strategy Call for US and Canadian Inventors

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Want to learn more? 

 

 * Check your project for commercial-readiness with our free 6-page report:
   https://innovationsuccess.scoreapp.com/  
 * See if you are eligible for the program: www.USA30mins.com (USA) /
   www.academy30mins.com (Australia, Asia Pacific, Europe) 
 * Be part of our community by joining our groups:
   https://www.linkedin.com/groups/8531890/ and
   https://www.linkedin.com/groups/40975/ or 
 * Subscribe to our weekly newsletter:
   https://www.linkedin.com/newsletters/negotiating-innovation-6951032646961360896  

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