| A joint venture partner, or strategic partner, is | | | | several different purposes. Let's say it's a new kind |
| sometimes overlooked as a possibility of funding. | | | | of applicator for creams, lotions, soap, and |
| What is a strategic or joint venture partnership? It's | | | | medications. Another company has a lotion for the |
| when two companies combine efforts to obtain a | | | | treatment of skin irritations available by prescription |
| goal that would be difficult for either one of them to | | | | only. You sell the exclusive rights to use your product |
| achieve individually. | | | | to apply prescription lotions to that company. Since |
| For example: You may have the product and the | | | | you have several other major markets for your |
| other company the distribution system in place to | | | | product, giving up one, the application of prescription |
| reach potential customers. If you jointly market the | | | | lotions, won't have a material effect on your future, |
| product, both of you win. You don't have to fund the | | | | and you get much needed cash now. The other |
| costs of reaching the potential customers; the other | | | | company now has a product that helps in its brand |
| company can broaden its product offering, and | | | | identification and sales. |
| therefore value, to its customers by offering your | | | | One last example: You have a customer database |
| product. That company doesn't have to fund the | | | | that has been successful in selling your products. You |
| research and development costs of a new product. | | | | offer a company that has similar, but not |
| Another example: You have a product that requires | | | | competitive, products the usage of your database in |
| injection molded plastic components that are | | | | exchange for a percentage of the sales generated. |
| produced by expensive specialized custom equipment. | | | | To find a potential joint venture partner look in your |
| Normally a company that provides the injection | | | | industry trade journals for announcements. Search |
| molded plastic components would charge a hefty fee | | | | business newspapers like the Business Journal Look |
| to build the custom equipment, and also charge you | | | | for companies that provide complementary products |
| for every part produced. A strategic partnership | | | | or services to your own company, or those in a |
| might mean that in exchange for not paying for the | | | | market that would be appropriate for your products. |
| custom equipment up front, you will pay the plastics | | | | Attend trade shows. And of course search the web. |
| company a small fee, similar to a royalty on your | | | | If you don't want to take out a loan or sell part of |
| sales for a limited time period. You win, because you | | | | your company to outside investors, a joint venture |
| don't have to invest cash in equipment and the | | | | partner can be exactly what you need. You can |
| plastics company wins by having a revenue stream | | | | grow your company, find new companies, or target a |
| greater than the custom equipment would generate. | | | | new market without expending additional money. It's |
| One more example: Your product has customers in | | | | a win win situation for both you and your joint |
| several different markets and can be used for | | | | venture partner. |