Protecting IP early in a company’s formation may have an impact on the company’s ability to attract investment
If a startup intends to become a well-established, successful business, it must carefully manage all of its resources, both real and intangible, in the same way that a well-established, successful business does — by focusing methodically on maximizing the return on every expenditure. If the company is established on proprietary technology, it is vital to properly develop an intellectual property (IP) strategy as part of the business plan. At all phases of a company’s development, a well-managed and organized IP portfolio is appealing to potential investors and may be utilized to attract financing.
The potential of a company to attract investment may be influenced by protecting intellectual property early in its formation
Intellectual property rights are economically significant company assets in which early-stage companies should definitely consider investing in order to remain competitive in the market and viable with investors. Taking aggressive actions to obtain these rights and establish an IP portfolio will give considerable benefits to the company by enhancing the company’s worth and reputation, as well as giving it a competitive advantage over other companies in the area. During the creation of an IP portfolio, the guidance of an experienced IP attorney is a critical strategic asset to an early-stage business. Although some early-stage companies may consider hiring a patent attorney to be too expensive, the quality of your intellectual property rights will affect the value of your business and your ability to obtain financing.
An effective IP strategy helps a company identify its intellectual property assets and develop a strategy to preserve, optimize, and monetize these assets. The addition of a patent, or patent application, to an early-stage firm’s IP portfolio, for example, makes the company an appealing investment option to investors. Pending patent applications can also be utilized by investors to determine if an early-stage firm will be able to effectively repel possible competitors and separate itself from other less confident business endeavors. Although IP is not a prerequisite, some investors would not even consider an early-stage startup that lacks IP protection.
When it comes to seeking outside financing, investors begin to learn about your firm through your business plan. The business plan contains all of the relevant information about your company, and one of the most advantageous components of a business plan is the inclusion of an IP strategy. Companies frequently fail to recognize that they create IP in the process of doing business, such as logos, taglines, customer lists, IP domains, formulae, and algorithms. It should also be highlighted that not all IP assets, such as trademarks, trade secrets, and copyrights, need a financial commitment. Knowing what to protect and when to protect it can help you save money while also strengthening your IP portfolio.
Specifically, your business plan should list any intellectual property assets that the company already has or is in the process of acquiring, as well as the status of each IP asset in the company’s portfolio. Comprehensive knowledge of the company’s IP assets and the implementation of practices and procedures to keep these assets secure will signal to investors that you are on top of your IP and that any future investment will be protected, at least in part, by your IP.
Due diligence on your competitors’ IP assets may also be part of your IP strategy. This is also useful to potential investors, who will want to know what analysis you have done on your competitors’ IP strategy and portfolios, as well as how you intend to stay current on changes.
Finally, throughout the early phases of development, businesses must carefully design their IP strategy as well as their commercial strategy. While an early-stage company may not have the resources to do all it would like to at this level of development, there are some components of an IP strategy that do not require any money and simply demand structure and concentration.
