I am not a patent attorney nor I advise about patent strategies. I help startups with fundraising and my analysis about the suitability of the strategy derives from this perspective. This is a beginners guide to IP strategy as an element of a fundraising strategy.
As I have worked with tens of high-tech startups during the last years throughout Europe, I have witnessed all different types of IP strategies. From companies that pose a great importance to building a large portfolio of patents to startups that dismiss the value of patents and focus their IP protection strategy on copyright, trademarks and secrecy.
There is of course a huge bias in terms of industry. Patents are generally regarded as a key intangible asset in the chemical or biotech industries, for instance, while very few software startups invest efforts, at least in Europe, in a patenting strategy.
In order to assess what IP protection strategy to implement, a practical and straightforward approach could be as follows:
1. Assess your industry and vertical. Take a look at patent statistics in your industry. While patents are an obvious instrument for IP protection in biotech, they are not than commonly used by software companies. However, do not limit your assessment to the industry and get deeper into your vertical and specific application. Within software, there are fields in which patenting is definitely recommended.
2. Assess your competition. Do your competitors have a portfolio of patents? Then you must seriously consider to prepare some applications. Even when the value of patents could not be a 100% safe investment, VCs and investors will benchmark your company against competitors and you don’t want to lose one important investor because of a poor IP strategy.
3. Assess the portfolio of potential investors. Look at the investment portfolio of some of your preferred investors. If their invested companies have patents, then it is time to assess your patentability options.
4. Understand your market (geographies, value chain, etc.). If your innovation, for instance, it is mainly embedded into software, then you should consider patenting if you are based or target the US market. However, if your market is the EU, it can be better not to waste time and effort in patenting.
5. Assess the SoA. Finally, assess the state of art, that is, search for patents within your application and tech field through patent databases.
6. Finally, but most importantly, think of your exit strategy. Will a portfolio of patents be a hook for potential buyers? Do not forget that potential investors always think in terms of exit returns.
Having followed these steps, you will surely have a much better idea not only if patents are a feasible option but also whether patents would strengthen your competitive position. At the end of the day, you must realise that raising investment is also a competitive process in which you aim to stand out from the crowd and patents might be another key element of your fundraising strategy.
Good luck!
