We recently formed a joint venture agreement to be able to populate one of our new web properties with several million legal documents, primarily court filings.  Generally, joint venture agreements are typically entered into by larger companies, not small to mid-sized businesses (SMBEs), but we felt this was the most effective way to accomplish our objectives.  Parenthetically, it also functioned to help us resolve some ownership and IP issues around a product which was developed for us by one of our consulting partners.

I’m sure many of you are familiar with the nature and objectives of a joint venture relationship, as opposed to a strategic alliance.  For those of you who are not, here is a quick review of the basics:

A joint venture is a legal entity formed between two or more parties, where the parties contribute equity and agree to an allocation of ownership and control, as well as the revenues, expenses, and their respective responsibilities and obligations.  The joint venture can be for one specific project only, or it can result in an ongoing business relationship.  This differs from a strategic alliance agreement, which is a much looser relationship involving contractual obligations but no equity stake (you can see lots of strategic alliance agreements here).  I should quickly note that a joint venture may be any legal structure (a corporation, limited liability company, partnership, etc.), the determination of which depends on a number of considerations such as valuation, tax, and liability.

OK, so back to our regularly scheduled programing.  We chose to enter into a joint venture agreement for several reasons:

1. We had a great partner we trusted.  I can’t emphasize how important this is, and I can’t say enough about the quality of the team we are working with.  For us, this relationship represents an important commitment around what we hope becomes one of our major web properties. 
2. The relationship provides an excellent way for us to scale up and leverage each of the parties’ strengths.  While we have outstanding technical and engineering resources, the group we JV’ed with has 10-15 years of experience in acquiring and managing the content that we are using to populate this particular web site.  We have built up a very deep bench of marketing and product development expertise in providing legal information services to the legal and other professional service providers, so it’s a great fit.
3. We were able to clearly identify and allocate resources and responsibilities, and we needed a structure which could help us cleanly allocate intellectual property.
4. We both needed to think about a longer term relationship which would provide appropriate incentives in the form of buyout provisions to make sure that everyone was committed to the deal.

So how’s it going?  Great.  We got off to a bit of a slow start, but we’re turning the product loose in the next 60 days or so, and we’re excited about the prospects.  Stay tuned.