Can small startup company move from product design and sell to license out IP of there product?
Technically it is possible but in reality it is not so easy. As someone remarked this kind of business model requires not only a unique idea but even legal and patenting skills which are not so common in startups. In addition the value of an idea is proven on the market so nothing can be sold as IP unless it is broadly tested and successful. Finally it heavily depends on idea's lifecycle: considering current (for instance) technology evolution pace a new idea can be new for 3-6 months maybe. For this reason a startup should be an endless generator of innovative ideas to live with this kind of business model.
Are you asking if a small start-up can sell it's intellectual property as a license instead of or after product development? Well this is certainly true.. just would have to ask why sell the IP? If key to the business, I would expect the start-up to protect the IP and sell the product...
Yes small startup can do it. Benefits could include
- relying on companies with better manufsacturing capacities
- wider distribution capacities
- better knowledge of the market
- access to new markets
- turning competitors into partners
- additional revenues, IP could be applied to other products and services more than the one developed