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Initial License Offerings (ILOs) are a fast and low-risk way to raise capital that benefits both businesses and buyers. An ILO buyer will receive annual royalties based on the company’s revenue, but only once they have qualified their license by promoting the business or products.

Initial License Offerings have several key benefits:

Growing Funds To Grow Businesses

Releasing an ILO enables companies to tap into the growing sharing economy. Buying an ILO is a low-cost and low-risk way for buyers to fund a business, increasing the number of people in a position to support the company.

ILOs are low-risk for the company too. The amount paid out in royalties is agreed beforehand, and rarely exceeds 10% of their revenue. This makes Initial License Offerings a highly effective way for growing businesses to fuel the rapid growth they need. According to Neil Patel, rapid growth is a key indicator of success for many startups.

Furthermore, the additional funds are not limited to the license sales. ILO buyers will bring a company’s products to new audiences, increasing sales.

 For example BEOND.TV, an AI-driven streaming service with a focus on customer-friendly advertising, is generating funds through ILOs to set up collaborations with major media companies. At the same time, their ILO buyers spread the word and increase their viewership.

The sale of ILOs also helps businesses make the right decisions to grow their company. To begin listing their license offering, every company must prove a business plan able to achieve the necessary revenue predictions, reviewed by an ILOCX specialist.

An agreed percentage of ILO funds are spent on business growth through marketing, promotion and product development. Furthermore, ILOCX provides expert help at every step of promoting an ILO campaign, ensuring companies find passionate buyers.

Raising Awareness

One of the unique aspects of ILOs is the qualification process.

To receive royalties each year, ILO buyers will help share the company with friends and family. An ILO contract sets out terms for buyers to promote the business or product through social media, referral codes or other means.

74% of consumers say that word-of-mouth is a key influence on their purchasing decisions, making this a highly effective form of marketing. Companies get an introduction to thousands of potential customers in addition to the ILO funding. This leads to a boost in sales, growing buyer royalties and greater brand recognition.

For businesses seeking narrow audiences this is a huge bonus, as each buyer promotes directly to their own niche audience. A recommendation from a trusted friend is 50 times more likely to result in a purchase than traditional advertising.

As a result, the sale of ILOs can fund revolutionary products and technologies that could struggle to find their niche audience through other funding methods.

For example, British company ConFlow are using ILOs to bring their revolutionary self-recharging battery to a wide audience through thousands of ILO buyers promoting the product to their own audiences.

Because ILO buyers receive royalties based on revenue, they are motivated to become advocates for the brands they believe in and contribute to their success.

Benefits For Buyers

Buying an ILO has a number of benefits. Unlike an investment, an ILO enables buyers to directly impact the success of their chosen company, as they have bought a license to promote the business or product.

Besides increasing the company’s revenue and their own royalties, buyers can also earn a commission or discount through sales or referral codes in some cases. Furthermore, as the revenue grows from increased awareness and sales, the value of the ILO increases. Later on, buyers can sell or trade their license at tenfold the value.

It’s not all about money though. Buying ILOs means the companies you love are able to grow, setting up new stores and developing new products. That means more great ideas from great businesses.

For example, We The People are a business dedicated to providing physical retail space to startups. From the launch of their first store in 2016 with 14 brands, they now enable more than 200 brands to showcase their products across North America and Asia.

The next stage of their global growth is being funded by the sale of ILOs and as a result, shoppers across the world will get to experience the output of those startups.

Initial License Offerings have many benefits for both companies and their licensees. Businesses are able to fund the development of their business while watching their sales and brand awareness grow rapidly. ILO buyers get to collect annual royalties from a successful business, and enjoy more from the companies they love.