You’re in the raise. Maybe you’ve had a few good conversations. Maybe you’re already in due diligence with one fund and circling back with two others. You know the round is coming — it’s just a matter of when.
And the burn clock is ticking.
Every founder who’s been through a fundraise knows the feeling: you’re doing everything right, the investor conversations are moving forward, and yet the money isn’t in the bank yet. The gap between “we think we’ll close in 60 days” and actually closing is where a lot of companies get squeezed.
What most founders don’t know is that this gap — the one they’re trying to survive — is often where their IP could be working for them.
I’m Rand Brenner. I’ve spent 35 years structuring licensing deals across entertainment, consumer products, MedTech, and digital markets. I’ve seen founders use IP licensing to generate real revenue during their most capital-constrained moments — not instead of raising, but alongside it. And I’ve seen the effect that incoming royalty income has on investor conversations that were already progressing.
This is a realistic look at what’s possible, what’s not, and exactly how to think about licensing as a bridge strategy during a raise.
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The Fundraising Reality in 2026
Before we get into the strategy, let’s be clear about the environment. VC fundraising hasn’t gotten faster — it’s gotten slower.
In 2025, the median time from seed to Series A stretched to 18–24 months, up from 12–14 months in 2021. From Series A to Series B, the gap stretched to 22–28 months. The average time between all rounds across stages increased from under two years to 2.3 years.
Typical time to close a Series A or B once you’re in active process runs 4–6 months — and that’s if the process goes smoothly. First-time VC funds raised just $3.6 billion in 2025, an 85% drop from 2021’s $24 billion, which means the LP capital is concentrated with fewer, more selective managers. Seed investors in 2026 are demanding more than promising ideas — they’re looking for early revenue signals, with many expecting $300K–$500K in ARR before committing.
What this means practically: the bar to raise has gone up while the timeline to close has stretched out. Founders need more runway, better traction, and more proof of commercial momentum than they did three years ago.
Licensing revenue addresses all three of those requirements — if you have the IP to support it and you start the conversation at the right time.
What Licensing Can and Can’t Do During a Raise
Let me be direct about scope, because the balanced view is the honest one.
What licensing can realistically do:
- Generate a meaningful upfront fee (five to six figures for most early-stage deals) that extends your runway
- Create recurring royalty income that shows up on your financials as a new, contractual revenue stream
- Provide a named commercial validation — a company willing to pay to use your technology — that strengthens the narrative in your data room
- Demonstrate market demand from a direction investors hadn’t considered, which can reframe your total addressable market
- Give you leverage in investor conversations: “we have three licensing discussions active” signals something about your IP that no slide can replicate
What licensing cannot realistically do:
- Replace a VC round. Licensing royalties are typically 3–12% of a licensee’s relevant revenue — they grow with adoption, not overnight.
- Close in two weeks. A licensing deal from first conversation to signed agreement typically takes 60–120 days, sometimes longer for enterprise partners with procurement processes.
- Work on IP you haven’t thought about. If you’re starting from scratch on identifying what’s licensable and who to approach, a round closing in 30 days won’t be affected by licensing work you start today.
The window for licensing to impact your current raise is a function of when you start. Founders who begin the licensing process six to nine months before they plan to raise are the ones who walk into investor meetings with signed agreements or active term sheets in hand. Founders who start when they’re already in due diligence get runway insurance at best — but that’s still worth having.
How Licensing Revenue Changes the Investor Conversation
Even when the timing doesn’t allow a signed agreement before you close, active licensing conversations change your investor meeting in measurable ways.
AI vs. non-AI valuations are splitting apart dramatically — AI startups raised average deal sizes of $51 million versus $4.7 million for non-AI in 2025, a 10.9x difference. If you’re not in that AI premium category, you need every proof point you can get.
A licensing conversation that’s progressed to a term sheet or LOI tells an investor three things they care about deeply:
1. Your IP is real. Not just filed — defensible enough that a corporate partner is willing to pay for privileged access to it. That’s a different statement than “we have two patents.”
2. There are markets you’re not currently serving. A licensing deal with a company in an adjacent industry signals that your technology has applications beyond your current product roadmap. For an investor trying to underwrite a large outcome, that’s meaningful.
3. You understand how to build strategic partnerships. The ability to identify, approach, and negotiate with corporate licensees is a business development skill that also applies to distribution partnerships, OEM relationships, and strategic acquisitions. Investors notice.
I’ve watched licensing conversations — even ones that hadn’t closed yet — change the terms of a raise. We’ve worked with founders where our role was developing the licensing campaign and getting them into serious conversations with potential licensees. In one case, a founder entered their Series A process with an active licensing term sheet with a Fortune 500 company that had come directly out of that campaign work. The round size increased. The valuation multiple improved. Two investors who had been circling came off the fence.
The licensing deal wasn’t closed. But its presence in the data room — a named Fortune 500 company willing to negotiate licensing terms for their technology — made the equity story more compelling in a way that no slide could replicate.
The Licensing Structures That Move Fastest
If you’re mid-raise and want to explore licensing in parallel, speed matters. Not every licensing structure moves at the same pace. Here are the three that can generate results fastest:
1. Non-Exclusive Short-Form License
The fastest licensing deal to close is a non-exclusive, limited-scope agreement that gives a company access to your IP for a specific, defined purpose — typically a pilot, a proof-of-concept deployment, or a limited commercial application. Non-exclusive means you don’t need to fight through the full exclusivity negotiation that slows down most deals. Limited scope means the legal review is shorter.
These deals can close in 30–60 days with a motivated partner. The terms are simpler. The upfront fee is usually modest — but it’s real revenue, and it’s a named commercial relationship you can reference.
2. Pilot-to-License Agreement
Structure any enterprise pilot you’re currently running as a licensing arrangement from the start. Instead of a standard SaaS or services agreement, frame the engagement as a time-limited license with conversion terms negotiated upfront.
If you have enterprise pilots already running, this reframing is faster than starting a new licensing conversation from scratch. It also converts an existing commercial relationship into a licensing reference — which is a different and more powerful credential in a fundraising context.
3. Option Agreement
Grant a company the option to acquire a full license within a defined period — typically 6–18 months — in exchange for an upfront option fee. The company locks in their right to access your IP. You receive immediate cash and a committed partner without having to negotiate full license terms on a compressed timeline.
Option agreements are underused and underappreciated in early-stage licensing. They’re particularly useful when a potential licensee is interested but needs more time to complete their internal evaluation — and you need cash and a commercial commitment now.
Where to Find the Right Licensing Partner Quickly
The most common mistake founders make when they decide to pursue licensing in parallel to a raise is approaching the wrong companies. They go to their customer list. But your customers are buying your product — they’re not necessarily the right candidates for a licensing deal.
The right licensing partner is a company that:
- Operates in a market adjacent to yours, not directly competing with you
- Has a distribution footprint or customer relationship that your technology would make more valuable
- Would face significant cost or time barriers to building your capability internally
- Has a business development or partnership function that’s actively looking for external technology
For most startups, the fastest path to this kind of partner is through three channels:
Corporate open innovation programs. Companies like Procter & Gamble (Connect+Develop), Unilever (Foundry), and GE (Current) run formal programs specifically to find licensable external technology. Applying through these channels puts you in front of a buyer who has already committed to the licensing model internally — cutting through the “should we do this?” conversation that slows down cold outreach.
Strategic investors and board members. Your existing investors and advisors have corporate relationships that you don’t. A warm introduction to a business development contact at a relevant company is worth ten cold outreach attempts. Ask specifically: “Who do you know in the [adjacent industry] space who might have interest in accessing our technology?”
Conference and trade show relationships. Industry conferences in your adjacent markets are where licensing relationships start. Not as vendor pitches — as peer conversations about the problems you’ve solved and how your approach might be useful in their context.
The Real Bridge: Runway and Narrative
Founders often frame the bridge round question as binary: raise more equity or get a loan. Licensing offers a third option that most founders never consider — and it has two advantages neither of those options has.
Revenue-based financing grew at 62%+ annually to reach $9.77 billion in market volume in 2025, which tells you how hungry founders are for non-dilutive capital. But RBF requires you to repay. Licensing royalties don’t. They’re revenue.
The runway argument is straightforward: even a modest licensing deal generating $150,000 over 12 months buys you the same runway as raising $150,000 in a bridge round — without the dilution, without the repayment obligation, and without the signal that you needed emergency capital.
The narrative argument is subtler but more powerful. A founder who walks into a Series A or B meeting and says “we extended our runway by 14 months through a licensing agreement with [Company X] while we were fundraising” tells a completely different story than a founder who says “we did a bridge.” One signals resourcefulness and IP strength. The other signals that you ran out of money.
What This Pattern Looks Like in Practice
The scenarios that play out most consistently across the founders we work with share a common thread: the licensing opportunity was already inside the business. It just hadn’t been looked at that way.
The typical starting point is an enterprise relationship — a customer, a pilot partner, or a strategic contact — who has expressed interest in the technology beyond the scope of the current engagement. Maybe they’ve said they’d love this embedded in their own platform. Maybe they’ve asked whether you offer any kind of API access or embedded licensing arrangement. Founders often log these comments as good-to-know and move on.
That offhand comment is a licensing conversation waiting to happen.
When we do an IP assessment with a founder mid-raise, one of the first questions we ask is: has any company outside your current customer relationship indicated they’d value access to your technology for their own use? Almost always, there’s at least one name that comes up immediately.
The next step is figuring out whether that interest can be structured as a licensable arrangement — a field-of-use license, a pilot-to-license agreement, or an option — fast enough to matter in the current fundraising timeline. Not every conversation becomes a deal. But a term sheet or letter of intent from a named company, even without a signed agreement, changes what a founder can say in a data room.
The licensing work doesn’t close the VC round. But it creates a commercial data point that investors weren’t seeing before. For a round that’s moving slowly, that data point — a named company willing to pay for access to your technology — can be what shifts the conversation from interesting to investable.
The Honest Timeline: When to Start
The math on timing is simple and worth stating directly.
If you plan to raise in six months or more: start your licensing process now. You have enough time for a licensing deal to close before or during your fundraising process, and the commercial validation will strengthen your raise.
If you’re in active fundraising right now: pursue the fastest licensing structures (non-exclusive, pilot-to-license, option agreements) and focus on getting something in writing — even an LOI or term sheet — that you can reference in investor conversations. The signed agreement may come after the round closes, and that’s fine.
If you close in the next 30 days: the licensing work you do now is runway insurance and post-close momentum — not a current-round factor. Still worth pursuing for both.
What you shouldn’t do is wait until after the round to think about licensing. The founders who get the most out of their IP licensing strategy are the ones who treat it as an ongoing business development activity — not something you turn on when you need money.
Ready to Explore What’s Possible?
If you’re in a raise or approaching one and want to understand whether your IP could be generating revenue in parallel, schedule a free 15-minute strategy call. We’ll look at your specific IP, your timeline, and what’s realistically possible given where you are in your fundraising process.
Ready to put your IP to work during your raise?
Schedule a free 15-minute strategy call with Rand Brenner. We’ll assess your IP and map the fastest path to a licensing conversation that supports your current fundraising goals.
Download the free 2026 IP Licensing Trends eBook — the seven shifts shaping the licensing market right now and how to position your IP to benefit.
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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.
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