Creating Joint Ventures That Benefit Both Parties

Sometimes 1+1=3. In the world of venture capital and also enterprise health tech, the creation of joint ventures represents a thrilling frontier for innovation and growth. These strategic partnerships can unlock incredible value, driving forward technological advancements and market disruptions. However, the foundation of any successful JV lies in the meticulous crafting of its term sheet. Here's how to structure a technology JV term sheet for success: **1. Clear Objectives and Scope:** Begin with clarity. Define the joint venture's mission, technological goals, and market objectives. A successful term sheet outlines the JV's purpose, ensuring all parties are aligned with a common vision and objectives. **2. Capital Contributions and Ownership Equity:** Detail capital contributions, whether cash, resources, or intellectual property, and establish how these contributions translate into ownership equity. This section should include valuation methods for non-cash contributions, ensuring fairness and transparency from the outset. **3. Governance and Decision-Making:** Define the governance structure of the JV, including the composition of the board of directors and voting rights. A balanced approach to decision-making rights can foster a cooperative environment and mitigate potential conflicts. **4. Intellectual Property (IP) Rights:** IP is often the core asset in technology JVs. The term sheet must clearly delineate the ownership, usage rights, and future commercialization of IP developed within the JV. Protecting and properly managing IP rights is critical for both parties' long-term success. **5. Revenue Sharing and Distribution:** Outline mechanisms for revenue sharing and profit distribution, considering the venture's long-term financial projections and the partners' initial contributions. This section should also address how losses will be managed. **6. Exit Strategies:** Even at the outset, anticipate the conclusion. Include clear terms for dissolution, buyout options, or sale provisions, ensuring that exit strategies are fair and executable for all parties involved. **7. Dispute Resolution:** Finally, incorporate mechanisms for dispute resolution. Opt for structures that prioritize mediation and arbitration to resolve disagreements, preserving the venture's operational integrity and partner relationships. **A Call to Collaborate:** The creation of a term sheet is not just about legal and financial protections; it's about laying the groundwork for a partnership that aims to achieve breakthroughs in technology. As venture capitalists and innovators, we have the opportunity to forge the future of tech through strategic joint ventures. Let's ensure our term sheets are not just agreements, but blueprints for success.

I've built equity partnerships in 9 different companies worth multiple millions (and growing). If you're an agency owner looking to build real wealth, here’s how to create these types of alliances: BACKGROUND Most agency owners will retire with nothing but their client list. The mistake they make: - Delivering great results for clients - Collecting their monthly retainer - Failing to leverage that value into ownership Meanwhile, I’m building a portfolio of businesses— Negotiating partnerships where I provide my marketing expertise in exchange for equity. Here's 5 steps I use to turn expertise into win-win partnerships: 1. FIND THE BLEEDING WOUND - Look for businesses where your specific skills solve a critical revenue problem - Paid ads expertise works great, but this applies to any high-value skill - Prove your worth by fixing their problem BEFORE asking to partner 2. DELIVER RESULTS THAT SPEAK FOR THEMSELVES - Set clear targets and exceed them - Document every win with precise metrics - Build credibility with the decision-makers before making your pitch 3. MAP THE ENTIRE BUSINESS ECOSYSTEM - Understand all aspects of their operation, not just your specialty - Identify where your expertise creates exponential value - Find the right people who complement your skillset 4. STRUCTURE A SYMBIOTIC PARTNERSHIP - Present a vision beyond traditional client-vendor relationships - I bring quality lead gen while my partners handle other core business functions - Co-found a new venture or become a transformational partner in an existing business 5. DESIGN AN EQUITABLE AGREEMENT - Figure out how to create more value together than you could independently - Structure equity based on each party's ongoing contribution, not just initial capital - Balance the ownership stakes to ensure everyone remains motivated and invested TAKEAWAY: Strategic partnerships work when each participant contributes distinct value that creates something greater than what existed before. The secret is proving your value first, then structuring a partnership deal that works for everyone. In 10 years, what will you have to show for your expertise—invoices or equity?

I recently spoke with a large PE fund that is extremely well-capitalized and looking to deploy billions in equity into the CRE industry. They are actively seeking partnerships with experienced, regional, and niche developers and operators to execute programmatic joint ventures. The fund provides LP equity on a programmatic, project-by-project basis, while the operating partners contribute expertise and execution. For example, they have partnered with a cold storage developer (a very niche asset class) with a national focus and a build-to-rent developer on the West Coast targeting a more generic asset class but with a highly localized approach. Each partnership is intended to be exclusive to a specific asset type and/or geography, ensuring no overlap between ventures. These partnerships are exclusive, meaning the operating partners cannot seek alternative capital for projects covered under the agreement. The fund retains approval rights for all projects within the partnership. For instance, they can veto a project altogether, and they also participate in key decision-making to ensure alignment with their strategic objectives. In return, operators receive standard developer and management fees as well as promoted interests when the business plan is successfully executed on a project-by-project basis. Qualified firms must have a proven track record, a niche asset class or regional focus, a compelling vision, and some luck to avoid conflicts with existing ventures the fund supports.