Five Shocking Truths About Licensing (From a Startup Perspective)

Posted by Alexis Bautista on August 20, 2015

A few years back I thought that being a small company and thriving through licensing was just not possible. “Licensing is for the big boys” – I reasoned. All that changed when I learned through my own Startup the following 5 shocking truths about Licensing. I share them now with you hoping that they can also help you make better decisions and empower you to follow all your dreams.

#1: There’s licensing beyond the big names.
Don’t put yourself down by comparing your company with the big licensing guys. You don’t compete with them, you play a different game. Many licensees are hungry for new things that they can try without great risks. They are willing to take small chances in order to find the next big license that will pay off big time for them. So don’t be afraid to join the licensing world, there are people here looking for you!

#2: Licensing can be the road to brand awareness.
Most people believe that only brands with big awareness can hope to enter the licensing industry. In reality, many big brands that we all know today became big only after (and because) they entered the licensing arena. Merchandise offers a huge opportunity for exposure so take that into account when negotiating a deal; think beyond the royalty, some deals would make sense (brand building wise) even without any royalty!

#3: You can make a mark in the Licensing industry.
The licensing industry is massive in terms of value but the licensing community is actually quite small. Moreover, there are a few key moments every year (tradeshows) when everyone in the industry gets together under one roof. This means that if you try, it is feasible to get noticed and to become part of the community; the key is persistence. One show might do nothing, but after a few, people will start to know you and your brand and soon many of them might be doing business with you.

#4: Lead Times in Licensing can be ridiculously long.
Some product categories decide collections many seasons in advance, and closing a licensing deal might involve a few dozen meetings with negotiations going on for months… That creates a big burden in terms of cash flow (especially for a Startup). Be ready for that, and try to combine those long term deals with others that can generate faster results.

#5: As a Startup you can offer a better value to licensees than most big companies.
First you are flexible in your terms, which means you can work out a true win-win deal. Second you react faster and are more adaptable. Finally, you can think outside the box and offer a true holistic solution to your licensees. In your company everyone is on the same boat and rowing in the same direction; that makes a big difference!

So my message to licensees is: take a chance! Set up a small budget and work with one (or a few) small Startup licensors to develop some concept collections. Think of it as your own in-house Startup team. Be creative, daring and show the resulting concepts to your clients. Something will click, and when it does, make it happen! It might become your most profitable licensing deal and if that Startup eventually becomes a big player, it will always be grateful for your help: Win-Win and Win Big! That’s what licensing is all about.

Alexis Bautista is the Founder, CEO and Creative Director of Kokonuzz (www.kokonuzz.com), a Hong Kong based Startup developing digital entertainment properties and licensing them. Although born in Barcelona, Spain, Alexis has been living in Asia since 2006. To contact him directly: gonuts@kokonuzz.com