In the fast-paced world of start-up businesses, intellectual property (IP) protection has emerged as one of the key factors that either make or break a new venture. The existence of a robust IP strategy has now been recognised as a key indicator of a business's potential for success.
More importantly, IP has become an increasingly vital element in an investor’s decision-making process. They want to see the businesses they are interested in understand the value of their IP and understand how to maximise that value.
INVESTORS VALUE IP PROTECTION!
In a recent report released by EUIPO and EPO, it was underscored that IP rights can greatly influence the business opportunities of emerging companies. According to the findings, entrepreneurs equipped with the appropriate IP protection, for example, are ten times more likely to attract investors.
The report underscores the competitive edge that businesses can achieve by prioritising patents and trade marks.
According to the numbers, start-ups filing trade marks early increases the likelihood of funding by 430% while filing patents early increase it by 640% and filing both achieves the highest likelihood of funding in both seed and early stages.
The table also emphasises that the filing of patent and/or trade mark applications doubles the likelihood of an investor achieving a successful exit. This is the statistic that best supports the pivotal position IP now plays in attracting investment.
WHAT IP COULD BE IMPORTANT TO A START-UP?
| Type | Protectable | Protection scope | Examples |
| Copyright | Creative work | Prevent copying, distributing etc. |
Art, writings, software, films, forms of expression, originality |
| Patent | Inventions | Legally protected monopoly for an invention, but time limited | New technology, novelty |
| Trade mark | Branding | Prevent others from using “confusingly similar” marks and logos | Names, logos, slogans, designs, identify and distinguish |
| Trade secrets | Secrets of value | Protects information that is kept secret and has economic value |
Private tech, business info, formula, technique, commercial value |
| Contracts | Defined in contract | Defined in contract | NDA, license, R&D agreement |
WHAT NEXT? THE IP AREAS EVERY START-UP MUST CONSIDER
- Filing a patent will, as seen the report, be of high value for investors. It is both a hard and long process for start-ups to obtain a patent. Therefore, it should be approached with careful consideration. It’s a balancing act; collect sufficient data to substantiate a grant application, but also make sure to file it promptly to preclude others from submitting theirs first.
- Trade marks are a no-brainer. The brand you use to establish and market your products and services will play a crucial role in building your business. Consequently, having to alter your name, logo, or domain down the road can prove expensive not to mention erode the previous marketing and brand development work. Doing it properly from the very start really will save you money!
- Trade secrets are only valuable if they stay secret. Take the necessary steps to protect them. This is one of the reasons why non-disclosure agreements are widely used. It's advisable to employ these when dealing with partners, guests, prospective employees, contractors, service providers, and even staff. It's important to realise that discussing your trade secrets with someone without an NDA in place exposes it to potential risks.
As investors are increasingly cementing their investment decisions based on the existence and understanding of IP, having and presenting a robust IP strategy must now be front and centre in every start-up's funding and growth strategy. If you would like to discuss how you can use IP to make your business more attractive to potential investors, please contact us today.
