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How would you determine whether to go with a Joint Development or Joint Venture?

When two companies talk about collaboration, especially in the area of technology or product, a formal mechanism that is discussed is a Joint Development Agreement. However, there are those cases where a joint development would lead to a possible joint business opportunities. Is there an approach as to how to determine, at the beginning, whether or not a JDA or JV is preferred?

3 Replies

David Still
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David Still Advisor
Founder of Start-ups, Entrepreneur, Financier and Advisor

Whenever possibledo notissue ownership toanyother party. As a general rule, the number of owners increases problems exponentially in the future. At any point in time, the value of ownership units is extremely, extremely complicated and lawyers have a field day telling stories to jurors. Plus, I can assure you, that when you issue ownership units you have absolutely no clue about thecombinations and permutations ofpossible outcomes - mostly bad.

Michael Dowden
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Michael Dowden Entrepreneur
Director at COTNow, Biz-Guru, Human Destiny, Heliski.ski and EMvision
Joint Development vs Joint Venture :GREAT QUESTION!!!

No simple answer, but I'll do my best : We live in a business world of collaboration, speed, agility and refinement. Both oppertunities and pitfalls are endless, bottom-line I would start with the following.....

Does my potential partner add multiple value to my business / product or service?
Does the value of the 2 as 1 multiply our speed / point of difference, competitive edge and profitability?
Are the values of my organization matched to the values of theirs?
Is our strategic vision and growth / future plan supportive, alligned / compatible?
Is there complete trust between all parties?
Is there proof that what they are promising to bring can be delivered?

If the answers to the above are all yes, I would considerate entering into a JD with the intention to J.V, merge or share swap (contracted with a NDA and Non-Compete), on conditions of delivery of certain milestones, I would agree up front documented value / split in that agreement, expectations clearly defined with time lines for both parties, agreement of costs and liability.

Most importantly; provisions to cancel, dissolve or end the JD and/or JV and most importantly exit clauses. Most people spend a lot of time on how to enter partnership, mergers or JDs and no where near enough time on how to terminate, end or complete that relationship so instead of amicable parting in mutual agreed benefit, there is often dispute and waisted energy / money and time.


Mitchell Bolnick
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Business Mentor, Adviser, Consultant for Start-ups, Small Businesses, Growing Businesses
I always like to concept of keeping it simple. Why go with a JV when that is always an option for a later date? Go with the JDA. If you are concerned, but an option for both parties to move to a JV at some point in the future into the JDA.
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