Too many startups lose out on the ability to protect their inventions and, by extension, their ability to monetize innovation, company value, and exit strategy. Whether it be blamed on cash flow (or a lack thereof) or not enough time, here are nine reasons a startup should be thinking about patents early on.
- Potential investors want to see they are not investing in a company that can be easily elbowed out of the market.
- You have a limited time window to apply. Many startups make this mistake and lose out on their ability to obtain patent rights. Ideally, patents are applied for before any public disclosure or offer for sale.
- Patents can help protect your fledgling startup from being overtaken while you refine your marketing and service strategy.
- In many exit deals, the question of patents will come up. Not having patents—or having poor quality patents—can be fatal to your exit strategy by indicating to potential buyers or investors that there are little or no barriers to your competition.
- You need not have perfected your masterpiece—patents protect the functionality or design of your invention, not the code or physical embodiment of it.
- The ability to market a product or service as “patent pending”—and it’s illegal to do so unless an application for patent has been filed—can lend credibility to your company, especially to investors.
- Current investors may become squeamish if actions are not being taken to protect against loss stemming from a potential competitor’s market entry.
- A smart patent strategy can add significant book value to your company. Ask Google why they bought Motorola—and immediately sold all of the physical assets for less than half the deal price.
- By starting early, you can bake intellectual property investment and strategy into your business roadmap, setting yourself up as a market leader.