A strong intellectual property strategy is vital for the survival of most businesses. It gives the company direction in the future, protects its key assets, increases the startup’s value and can minimize risk for investors. When seeking funding from investors it is important to have no issues regarding your Intellectual Property (IP).
Here are two true examples of times a startup did not receive funding because of a weak IP strategy:
- A startup we know watched helplessly as a $5 million Series A round of financing slipped through its fingers because a key founder hadn’t signed over his Intellectual Property rights to the company. Sure, he was willing to do it — in exchange for a sizable payment. What happened?
- The VC smelled trouble, and they walked away from investing. That was the beginning of the young company’s demise.
- Investors often make funding contingent on having all rights to Intellectual Property signed over to the company.
- A set of founders of a medical device company knew they needed to get their IP in order including confidentiality agreements, assignments of IP to the company, and patents. Investors told them to gather the necessary signatures as a condition of continuing into further due diligence. The founders assured that they’d get on it. What happened?
- Like most startups other pressing needs took priority
- Two years passed and they were still looking for funding
You don’t ever want to have to tell your Board of Directors, “Our key inventor left a month ago, and those patents we thought were assigned to the company, well, they weren’t.” Put an IP strategy process in place from the beginning to protect your vital IP. You will give investors positive information for use their due diligence as they assess investment risk of your startup.
To learn more about Creating a Competitive Advantage with Intellectual Property Strategy visit university.ventureforge.co