Karin Bryder

Intellectual Property – Patents

Patents form the core asset in the Virtual Company and a patent prevents others from using or selling the company’s inventions. There are three requirements for patentability: novelty, inventive step, and industrial application. Look out for potential infringement of the company patent rights. Freedom to operate means that the Virtual Company is not infringing other patents. The patenting process is legally complicated, and it is not advisable for the Virtual Company to handle patent issues internally. It is recommended to use professional patent attorneys for the drafting of a patent application and for handling of the day-to-day patent issues.

Risk and Rewards

Working with the Virtual Company business format is associated with both risks and rewards. In this chapter, both these perspectives are presented and discussed. For the analyses of both the risks and the rewards, the Strengths, Weaknesses, Opportunities and Threats associated with this business format are presented as a SWOT analysis. This can be used as a practical guide on what to do and what not to do.

Financials and Valuation

Without financial resources, which can be regarded as the fuel of the Virtual Company, there can be no activities and no development can be accomplished. These financial resources may be obtained in exchange for shares (an investment) in the company, and the price per share is set by the valuation of the company. “Soft money” is a term used for financial resources that are obtained not in exchange for shares in the company, for example, research grants. There is a responsibility to the investors or a provider of a grant to fully and transparently handle the finances. This is an activity where the attention to details is necessary. For the nonprofessional, such detailed control of the finances will take a substantial amount of time – time that is often used better in company development. It is, thus, recommended to keep track of bookkeeping by using external professional help.

Chapter 11 – Case Studies

This chapter presents a set of case studies based on interviews with selected individuals who have experience from working with or in a Virtual Company. The answers from these professionals points to the diversity and complexity in the utilizing of the Virtual Company format and can serve as firsthand information and understanding of this business format. The text represents the interviewees’ views.

Chapter 2 – Start-Up

There has to be a commercially viable idea, an invention, when commencing a new company. This invention, forming the basis for a new company, can come from different sources such as academia, companies, or private inventors. To start a company, a set of predefined criteria must be fulfilled, including product specification, market evaluation, and patent rights to the product. The product must be defined by establishing a detailed product description, including information on the product itself, its function, and its characteristics. Question to ask are (1) What is the product? (2) Who is going to buy the product? (3) Is the product unique, and if so in what way? (4) Who described the product or product concept first and when?

Chapter 4 – Business Development

The business development team is a communicator of the Virtual Company’s business mainly externally but also internally. This team will ensure that the development is in correlation with the demands from the outside world and telling the world of the Virtual Company developments when appropriate. Defining the core asset of the company is important and will ensure that all business development activities are focused on the development of the company asset and the product. Choose the business development team carefully and it should include all competences used for the product development. Regularly scheduled meetings using virtual communication and face-to-face meetings are important in order to keep everyone focused on the right issues. A well-prepared business development plan will save time and money. The business plan is not a one-time effort but needs to be continuously updated on the basis of the progress of the company and to be used in the overall execution of the business development activities.

The Importance of Intelligence

Competitive intelligence is a process to gather important information on competitors to the company and information on markets and other data related to the product and the company. Competitive intelligence results are instrumental in the business strategic developmental work. There are various tools to help in the company’s competitive intelligence endeavors; these are databases and competitive intelligence service providers. The competitive intelligence activity must be a prioritized activity in the Virtual Company, and a failure to properly monitor and act on relevant and key activities in the outside world might jeopardize the business.

Communication and Control

Communication is fundamentally important in order to keep everyone working in and for the Virtual Company on the same target and, thus, information is the key to successful development of the product and the company. The stakeholders in the Virtual Company include the founders/inventors, investors, consultants, and external resource providers. Keep the stakeholders informed of the company’s development and goals using formal prescheduled meetings with the project team. Look out for hidden agendas and personal goals from the stakeholders and board of directors that can be counterproductive to the company’s objectives.

Chapter 9 – Exit

An exit, a way out, is a term often used by shareholders and investors in the Virtual Company. An example of an exit is the sale or licensing of a final product, a product in development, or a service. Another example of an exit is an initial public offering (IPO). The value is defined by the intellectual property (IP) rights, experimental data, and the management and the risk associated with the project. A lower developmental risk increases the value of the company. The value of the company is furthermore defined in the context of communication with the market, being a private or public company. An investor’s final objective is a Return of Investment and when an exit is performed, the investors to obtain such Return of Investment, that is, a growth of the capital originally invested in the company.

Chapter 5 – Agreements

Agreements are a necessity to administer in any business and are especially important when to control the rights to improvements, new innovations, and new results. This is particularly important in the case of the Virtual Company since external resources are used for the development and progression of the company. Furthermore, the shareholders agreement regulates rights and obligations between the shareholders (i.e., owners). The fact that all development activities are outsourced requires legal professionals (business lawyers) to be engaged when drafting or negotiating agreements. To save time and effort, it is recommended to prepare templates of agreements often used, such as confidentiality agreements and service agreements.