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Definition: Licensing

Christina Hernandez Sherwood on May 07, 2014

Definition: Licensing

An alternative to debt, equity or grants is revenue through licensing. Licensing allows a company to avoid dilution, but it requires a thorough valuation to determine whether shareholders are best served by licensing or by raising additional capital and becoming further diluted.

Licensing proceeds can be subject to taxes. Hybrid agreements are possible in which the startup retains the rights to commercialization in its home market but licenses rights elsewhere, according to Avance, a company in Switzerland that specializes in valuation in life sciences.

Related: Funding Sources for Life Science Startups

Photo by Maksim Kabakou

Definitions are a weekly feature on eMed for current and aspiring healthcare entrepreneurs.

Category:  Creation  Tags:  Definition, licensing

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