What is a joint venture?

Some businesses think joint ventures are an official cooperation, others see them as a marriage. Either way, joint ventures are designed to boost businesses growth in areas such as IP, market share, and the bottom line. Find out why joint ventures are considered commercialisation courtships.

A joint venture is a legal term that describes the relationship between two or more parties entering into an agreement to work towards the same strategic goals while remaining separate entities. Joint ventures occur across most industries where companies may combine forces for a specific project but may even be competitors for others.

An example of how a joint venture works is media joint venture Yahoo7, combining the search engine Yahoo! with Channel 7 in Australia. The ‘Yahoo7’ joint venture is an Australian online strategy only: Yahoo! remains a standalone search engine outside Australia, and Channel 7 still broadcasts in a different medium (television) with no Yahoo! influence. The alliance works on the principle that the strength of their brands combined online garner a higher market share than two separate, smaller brands.

So is a joint venture a partnership? In spirit, yes, but technically, no. A partnership is more integrated, working across all business activities over a long term. A joint venture differs in that it relates to a specific project or business goal, usually with a defined end, that may only relate to part of the business.

For a lot of SMEs, however, joint ventures often relate to the whole enterprise, and could be the only viable option to grow their business without sacrificing what they’ve already built. Commercialisation is thus an important part of the joint venture process, so businesses must be able to identify the value they bring to a relationship—whether that’s IP, market share, or money.

Legal Advice

Commercialisation of an idea is the process you undertake to get your innovation—whether it is in the form of products or services—to the marketplace. Before you seek investment partners, you need to make sure your intellectual property (IP) is protected via either registered rights, such as patents, trademarks and designs, or unregistered rights, like copyright and confidentiality agreements.

Seeking legal advice early is crucial to the future success of any joint venture that may result from your commercialised idea. Your protected IP is what will attract potential partners, the ‘dowry’ that you bring to the joint venture marriage.