When Being a Market Opportunity Is Not Enough for Success

“Would you consider yourself a threat or an opportunity to the people in your market?” asked my friend, K. P. Reddy.K. P. is the co-founder of The Combine. Working with big businesses and technical founders, The Combine converts promising intellectual property into sustainable businesses.I asked K. P. and his team to visit one of my investments whose value is based on intellectual property. I knew he and his team could help. They have a unique perspective having dealt with so many of these types of companies.

Threat vs. Opportunity

“I am not sure how to answer. What do you consider an opportunity, and what do you consider a threat?” the founder asked.K. P. said, “If the buyer says to himself, ‘If I do something with you, I may lose my job,’ that’s an opportunity. On the other hand, if the prospective buyer says, ‘If I don’t do something with you, I will lose my job,’ that’s a threat.”“By that definition, we are an opportunity,” the founder answered.Without hesitation, KP said, “Then your priority should be to reposition your company as a threat.”

Pitfalls of Licensing IP

The discussion which ensued was all about how to do this. The short answer was simple. Get a product into the market built on the intellectual property. It doesn’t matter if it is perfect, just get it into the market. This is how a company with intellectual property becomes a threat to the market.The company was pursuing a licensing mode. As such, the company remains in the “opportunity” category and should not be viewed as a threat. The market will continue to wait.

Getting the Big Check

This market approach to realizing value from intellectual property was also described to me by a VC firm in Silicon Valley. This firm mines promising intellectual property from university laboratories.If they believe they can get to a product quickly, they will invest. They match a researcher with a CEO who is familiar with the addressable market. They then fund the business for three years. It either demonstrates commercial traction, or they let it die.You’d better be a threat if your value is intellectual property. If not, you just might find yourself being everyone’s opportunity, but no one will write a big check.