Introduction
The process of selling patents can be complex, mainly when dealing with large corporations with extensive bureaucracies and legal teams. However, for patent holders looking for potential buyers, small companies can provide an alternative with a lot of promise. This article will discuss the benefits of selling your patents to smaller companies and why this market segment can be precious to patent holders.
Definition of a Small Company
In this discussion, “small company” refers to private businesses with annual sales of $1 million to $100 million or small public companies known as “microcaps.” These businesses typically operate on a more limited scale, but they can still provide significant opportunities for expansion and innovation.
Small Companies Have Fewer Gatekeepers
In contrast to large corporations, small businesses typically have a lower number of formal gatekeepers. Gatekeepers could make the process of purchasing patents more difficult. Patent holders have a better opportunity to engage directly with decision-makers and investigate potential opportunities when there is less bureaucratic red tape.
Less Sophistication in Analyzing Patents
Smaller companies may not possess the same expertise or resources as their larger counterparts when analyzing patents. Because of this, they are more likely to approach patent purchases with a pragmatic mindset, placing a higher value on a deal’s potential benefits rather than overanalyzing every detail of the patents. Because of this, there is a favorable environment for patent holders interested in efficiently striking a deal.
Multiple Options for Buying Patents
Small companies have more flexibility than large corporations when structuring patent acquisition deals. They have various options available to them, including cash, equity, stock trading, partnerships, and even hiring the inventors themselves to assist in developing the patents into tangible products. Because of its malleability, a patent sale to smaller companies has more strategies for maximizing the value of their intellectual property.
Fear of Lawsuits
Compared to larger corporations, small businesses typically have a greater apprehension regarding the possibility of being sued. Consequently, they have a greater propensity to take patent acquisitions seriously. When you sell your patent to a smaller company, you not only provide them with a defense mechanism against the possibility of future litigation but also benefit from the small company’s genuine interest in safeguarding its product or service lines. Large companies think more about brands than patents to protect their products.
Direct Access to Decision Makers
When dealing with smaller businesses, patent holders have an unobstructed path to the decision-makers within the organization, including the CEO and board members. Because of this accessibility, the communication and negotiation processes can be carried out more effectively. Patent holders can participate in fruitful conversations that ultimately lead to decisions being made more quickly when layers of middle management are removed.
Post-Funding Opportunities
When a small company has recently finished a fundraising round, they typically look for ways to expand its operations rapidly, and buying patents is one of these ways to expand. Acquiring patents can be a valuable strategy for accomplishing this growth promptly and efficiently. You can position your intellectual property as an attractive asset that aligns with the expansion plans of a small company that has just secured funding by selling your patent to that company.
Motivation to Buy Patents
Patents are held by a relatively small number of small businesses, and some of those businesses don’t even have any patents. Small businesses are motivated to actively seek patents that can improve their products, protect their current position in the market, or propel innovation due to the scarcity in the patenting landscape. If you market your patent as a solution to their problems or requirements, you can increase the likelihood of making a successful sale.
Amplifying Value
For small companies, acquiring a patent can be a significant milestone. It can increase their credibility, bring in investors, and demonstrate their dedication to innovation. When you sell your patent to a smaller company, it allows them to increase the value of the purchase, which turns the transaction into a momentous event that benefits both parties. On the other hand, it can be difficult for large companies to generate the same level of amplified value when it comes to the acquisition of patents.
Conclusion
Although large corporations might be the most logical option for selling patents, it’s important to remember that smaller companies have many benefits that can’t be ignored. Small businesses have the potential to present patent holders with enticing opportunities, ranging from the simplification of decision-making processes to the enhancement of the patent’s potential market value. Patent holders can increase their chances of finding willing buyers and securing lucrative deals for their patents by considering small companies’ distinctive characteristics and motivations. Patent holders must investigate the varied market landscape and consider the possible advantages of selling their inventions to smaller businesses.
Patent holders can avoid the challenges of dealing with convoluted bureaucracies and official gatekeepers if they focus on small businesses as their target market. They can locate decision-makers more receptive to investigating patent acquisitions and willing to engage in direct conversations with them. In addition, smaller businesses are typically more eager to protect themselves from the possibility of being sued, which is one reason they have a strong interest in acquiring patents that can provide them with legal safeguards.
Patent holders have various options available to them, thanks to the adaptability of small companies in how they structure deals. Small businesses are willing to negotiate and find mutually beneficial arrangements, regardless of whether the arrangement involves cash, equity, partnerships, or hiring inventors to develop the patents. This degree of adaptability can result in quicker and more efficient transactions, saving time and effort for both parties involved in the transaction.
In addition, selling a patent to a smaller company can have a sizeable influence on the growth trajectory of the latter. It allows them to leverage the acquired intellectual property to broaden their product offering, enter new markets, or differentiate themselves from other businesses in their industry. This additional value has the potential to entice investors and board members, which would generate a positive narrative regarding the company’s innovative potential.
In conclusion, patent holders shouldn’t dismiss the possibility of making money off their intellectual property by selling it to smaller businesses. Small businesses offer an environment conducive to successful negotiations because of their unique qualities, such as lack of formal gatekeepers, lower sophistication in patent analysis, fear of legal action, and direct access to decision-makers. In addition, the fact that smaller businesses are more likely to be motivated to buy patents and to be able to increase the value of patents that they already own makes them an attractive market for those who own patents. Patent holders can increase their chances of successfully selling their patents and finding enthusiastic buyers who recognize the value of their intellectual property by exploring this alternative avenue. This will allow them to find buyers who appreciate the value of their intellectual property.