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Joint Ventures

  • Distributorships have limitations

    • Typically only create revenue from active products (no early-stage work)

    • No upside on capital gains, no deep integration on product development – thus setting up the relationship for eventual atrophy later

  • Joint ventures

    • Next possible step is a joint venture

    • JVs require a technology and management commitment, and possibly some people on the ground in Japan

    • But offer ability to translate worth of your IP into both minimum licensing revenue and capital gains AND locking in commitment from your partner

    • JVs can be started from Day One and are actually the most desirable partnership format for Japanese

    • Typically Japanese firms will allow IP as your capital commitment and match with US$1-3m, depending on how developed your business is

    • If you have a brand, you can leverage harder (DJ)

    • Absolutely need to maintain constant contact – a JV is a marriage

    • If you think you want ownership later, build it into the deal from the start – very hard to change customary relationships after the fact (HF)

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