Despite the apparently great differences between licensing and venturing as commercialization strategies, they have a lot in common, including certain prerequisites. Either way, somebody has to spend money—a lot of money. Whatever you may have spent so far will pale in comparison to what’s required henceforth. So whether you want to market it yourself or convince someone else to buy the rights to do it, you need a convincing package. This includes …

Proof that it works. This means a working model or, better yet, an engineering prototype. There’s no substitute for showing investors or potential licensees something they can see, touch, and watch do its stuff. Without a looks-like, works-like model, you haven’t much chance of interesting anyone beyond family and friends (see Chapter 4).

Market analysis. This is a serious breakdown of potential customers, how many of them exist, how much they will pay, what the competition is, and how you will beat it. You need to know exactly what the market channels are through which products like yours reach the market. You should be able to show significant points of difference between your product and the competition’s. If you cannot, you’ve got a problem. You’d better be sure your invention has no fatal flaws.

Above all, you have to be able to show why people will buy your product through statements from prospective customers and focus group results, backed up with believable figures in dollars and cents. The surest way to turn off a prospect who asks about the market is to respond, “When they see it, they will love it.” It ain’t necessarily so. Your market analysis will determine whether it is worth going on with your invention, regardless of its technical elegance, and that analysis forms the basis for the next thing you need.

Commercialization plan. This is a detailed analysis showing how you will develop, market, and sell your invention; the cost; and who will do the work—with all this information translated into a year-by-year, dollars-and-cents format, projected five years out. Investors (other than friends and family) will absolutely demand a plan; prospective licensees may insist, too. Even if they do not, you should have one.