Expanding into a new market always looks exciting from the outside. Maybe it’s a new country, a different industry, another customer base, or a distribution channel you haven’t pursued before. You look at the size of the opportunity and naturally start thinking about how much business you could generate. But before you get too far down that road, there’s another question I think is just as important: What are you going to have to spend before you find out whether the market is really as good as it looks?
That’s where the economics of expansion can change very quickly. You may need salespeople who understand the market, distributors, inventory, marketing, customer service, management, regulatory or compliance expertise, working capital, and relationships with customers and suppliers. Depending on where you’re expanding, you may even need a local office, warehouse, operating entity, or manufacturing capability. You can find yourself building a substantial amount of infrastructure before you’ve generated enough business to know whether your original assumptions were right.
That’s one of the reasons I think licensing is one of the most underused market-entry strategies. Most people think about licensing primarily as a way to generate royalties from intellectual property. It certainly can do that. But licensing can also give you a way to enter and learn about a new market without betting the company on being right about it.
Market Entry Is Easy to Underestimate
When I talk with companies about entering a new market, most of the initial discussion naturally centers on the upside. How many customers are there? How large is the industry? What could sales become? Those are all questions you should be asking. But I also want to know what you have to commit before those projections have been proven.
Start with the people required to sell into the market. An experienced technical sales organization can become a significant annual expense very quickly. Add management, commissions, benefits, travel, trade shows, samples, marketing, customer support, and inventory, and you’ve created a sizable commitment before you’ve developed meaningful traction. If you’re entering a regulated industry or expanding internationally, now add compliance, regulatory requirements, local market expertise, and potentially an entirely different distribution structure.
I don’t think it makes sense to put a universal number on the cost of entering a new market because every industry is different. But the underlying problem is remarkably consistent: direct market entry requires you to make commitments before the market has proven itself.
Now Look at the Same Market Through Licensing
Instead of asking how you’re going to build all of that infrastructure yourself, suppose you approach the opportunity differently. You identify a company that’s already operating successfully in the market you want to enter.
That company may already have the customers, salespeople, distributors, warehousing, service operations, regulatory capabilities, manufacturing relationships, and local management you would otherwise have to build. Just as importantly, they understand how the market actually works. They know the pricing environment, the competitors, the buying cycles, and which customers are likely to move quickly and which ones may take years.
You bring the intellectual property and the business opportunity. They bring the operating platform and market knowledge.
Now you’re no longer asking, “How do we build a business in this market?” You’re asking, “Who already has the business infrastructure we need to reach this market?”
That may sound like a subtle difference, but from a commercialization standpoint it’s enormous. Instead of spending significant capital and management time recreating capabilities that already exist, you’re looking for a licensing partner who can put your intellectual property through an established commercial infrastructure.
Enter the Market, Test It, and Learn
This is the part of licensing strategy that I think gets overlooked most often. Licensing can give you an opportunity to test a market commercially without first building everything required to serve that market yourself.
Maybe the market performs exactly as expected and you expand the licensing relationship. Maybe your licensee discovers a customer application you hadn’t considered. Maybe you learn that your pricing assumptions were wrong, the sales cycle is longer than expected, or another territory or application is actually stronger. And sometimes you find out that the market simply isn’t as attractive as everybody thought it was.
None of those outcomes necessarily represents failure. You’ve learned something extremely valuable. The question is how much it cost you to learn it.
If you’ve already hired an organization, leased facilities, built inventory, established distribution, and committed substantial working capital, changing direction can be expensive. If you’ve entered through a properly structured licensing relationship, your financial and operational exposure may be considerably more controlled.
That’s why I sometimes think of licensing as a form of strategic optionality. You’re not just creating another source of revenue. You’re creating choices about where, when, and how deeply you want to participate in a market.
Getting Out Is Part of the Strategy Too
Nobody wants to talk about getting out of a market while they’re excited about getting into it, but I think you should. If you enter directly and spend two years building an operation that ultimately underperforms, you still have employees, contracts, inventory, facilities, distribution relationships, and all the other commitments you made along the way. Some costs are sunk. Others continue while you unwind the operation.
A properly structured licensing agreement can give you a very different framework. Territories, performance requirements, minimums, milestones, duration, renewal provisions, and termination rights can all help define what happens if the opportunity doesn’t develop as planned. Licensing isn’t risk-free, and you still have to select the right partner and structure the agreement correctly. But there’s a considerable difference between managing a licensing relationship that isn’t performing and dismantling an operating business you spent several years building.
That downside protection is part of the licensing strategy too, and I think it deserves far more attention than it usually gets.
I’ve Seen This Situation Many Times
Over the years, I’ve reviewed licensing opportunities where the intellectual property had potential applications across several industries, markets, or distribution channels. The IP owner could see the opportunities clearly. The problem was that pursuing each one directly would effectively require building another business.
Different customers require different sales organizations. Different industries may require different distributors, marketing approaches, technical expertise, relationships, and regulatory capabilities. At some point, the question stops being, “Is there a market for our intellectual property?” and becomes, “Are we really prepared to build the organization required to serve that market?”
Those are two completely different questions.
In many situations, I’d rather look for the company that’s already embedded in that market and ask whether our intellectual property could strengthen what they’re already doing. Instead of recreating their market position, we find a way to leverage it. That’s one of the fundamental advantages of licensing, and it applies whether you’re talking about a geographic territory, a vertical industry, a customer segment, or an entirely different application for the same intellectual property.
You Can See This Strategy in Territorial Licensing
Pharmaceutical and biotechnology companies provide some very visible examples of this approach. A company may develop the underlying technology or product but license commercialization rights in particular geographic markets to another company that already has the infrastructure necessary to operate there.
In early 2026, Nuvation Bio entered into a licensing arrangement with Eisai covering commercialization rights for an oncology product across a broad territory that included Europe, parts of the Middle East, Canada, Australia, New Zealand, India, and several Asian markets. Nuvation received €50 million upfront as part of the arrangement.
Obviously, a pharmaceutical transaction of that size is very different from the licensing opportunities most companies will encounter. But forget about the size of the deal for a moment and look at the strategy behind it. Imagine what it would take to build the country-specific regulatory, sales, distribution, and management infrastructure required to commercialize directly across all those markets.
That’s the lesson worth paying attention to. You don’t necessarily have to build an organization everywhere you want your intellectual property to generate value.
What You’re Really Licensing Into
There’s another side of this that I think is even more interesting. When you find the right licensing partner, you’re gaining access to much more than a sales force or distribution channel.
An established company knows things about its market that could take you years to learn. They understand what customers expect, what pricing they’ll tolerate, how competitors behave, how long buying decisions take, which distributors actually perform, and where companies entering the market tend to make mistakes. They’ve accumulated relationships, processes, experience, and market knowledge through years of operating there.
That knowledge is part of the value of the licensing relationship.
One of the easiest ways to lose money entering a new market is to assume that what worked in your existing market will work exactly the same way somewhere else. Often it won’t. The right licensing partner gives you the opportunity to combine your intellectual property with a company that already understands the environment you’re trying to enter.
Licensing Doesn’t Have to Be Forever
There’s one more point I’d keep in mind. Licensing doesn’t necessarily have to define how you operate in that market forever.
Sometimes licensing is the long-term strategy. Sometimes it becomes one component of a broader commercialization model. And sometimes it can help you enter and learn about a market before deciding whether deeper direct participation makes sense later.
Companies often frame the decision as, “Do we license it, or do we sell it ourselves?” I think that’s too restrictive. Commercialization strategy is rarely that binary.
The better question is: What is the best way to commercialize this intellectual property in this particular market at this particular point in time?
The answer today may be licensing. Five years from now, it could be something different. The important thing is giving yourself the flexibility to make that decision based on what you learn rather than committing yourself to one path before you have the information.
Before You Enter Your Next Market
If you’re considering expanding into another market, I’d suggest doing a simple exercise before committing significant capital.
First, calculate what direct entry is really going to cost you. Don’t stop with manufacturing or product costs. Include the people, management, sales, distribution, inventory, customer acquisition, working capital, compliance, and the time required to develop the relationships and market knowledge you don’t have today.
Then look at the same opportunity from the other direction. Ask yourself what an established licensing partner could bring that you wouldn’t have to build. What customers do they already reach? What infrastructure is already in place? What do they know about the market that you don’t? What risks could they absorb that you would otherwise have to carry?
Then ask yourself one final question:
How much capital are you willing to put at risk before you know whether the market actually works?
That’s where licensing often starts looking very different.
Licensing isn’t simply a way to collect royalties. Used strategically, it can help you enter new markets, leverage somebody else’s infrastructure and market knowledge, test opportunities, control your exposure, and create new growth options for your business.
Sometimes the smartest way to expand isn’t making a bigger bet.
It’s finding a better way into the market.
Let’s Explore Your Licensing Options
If you’re considering a new market, industry, territory, or distribution channel, there may be licensing opportunities you haven’t considered.
Schedule a 15-minute consultation with Licensing Consulting Group. We can take a preliminary look at your intellectual property, where you want to take it, and whether licensing could give you a faster, more capital-efficient way to get there. After more than 35 years working with licensing opportunities across different industries and markets, I’ve found that sometimes a short conversation is enough to uncover a completely different way of looking at the opportunity.
And if you’d like to continue receiving the latest licensing strategies, practical tactics, real-world examples, and unique ways to use licensing to build and expand your business, sign up for the Licensing Consulting Group newsletter.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters, including the Batman Movies (1 and 2) and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money-Making Power of Licensing, was released in 2019 and is available on Amazon.com. He’s also a published writer, and his articles have appeared in several prestigious trade magazines, including The Licensing Journal, Intellectual Property Magazine, and License India.
Working Through a Licensing or Commercialization Challenge?
If you have market-ready intellectual property, a licensing campaign that has stalled, or a business opportunity that may benefit from licensing, a short strategy discussion can help clarify the next step.