Successful startups are often associated with good profits from a great idea or initiative in a relatively short period of time.
However, a lot of detailing, foresight, planning, funding and most importantly the passion to execute are extremely important. There can be several other challenges and failure rate can be high, even with some of the best ideas and great plans.
Start-ups when in need of funding approach the Venture Capitalists, Angel Investors or others to invest in their ideas.
These investors look at aspects such as the business case, initial investment required, viability of the project and of course, the benefits the funding would bring back, in terms of returns over a period. Another important aspect that they are increasingly looking at is the start-up’s IP or Intellectual Property.
Basis the white paper published by WIPO (World Intellectual Property Organization) titled Intellectual Property – The Basis for Venture Capital Investments, an investor would want to know where an invention or innovation or the idea they are investing in, aligns with marketplace, with reference to existing and potential competitors.
These investors would carefully want to evaluate the strength of the idea/innovation and the ability of the entrepreneur to commercialize the idea to the best of its ability.
Although the mindset of the Indian startups seem to be rapidly changing, one important aspect that seems to have been overlooked by many startups in the past is the importance of IP protection and an overall IP strategy.
This includes considering and planning around factors such as, what aspects should be protected, when and in which countries etc., based on the intended market.
As per a recent report, Indian start-ups filed about 909 patent applications in 2017 as compared to 61 filed a year earlier. The startup India program seems to have fueled and facilitated this very welcome change.
Appropriate IP protection via patents could not only establish the uniqueness of the product or solution but also offer a competitive advantage that could last for a term of about 20 years, under appropriate situations. There are other advantages such as:
- The threat of others copying is minimized with enforcement measures
- The technology/ product can be licensed to others for manufacture.
- The IP behind the product / technology can be sold later, if the owner (assignees) of these patent so desire for some financial consideration. Trademarks, copyrights or design rights are other forms of IP that can be explored.
Therefore, IP can become an important aspect of the overall plan of a startup attracting funding or later at the stage of valuation in case of a potential merger, buyout or sale.
It is important to note that different types of IP protection may have to be chosen, based on the IP strategy which may have to be tailored for specific needs, as there is no size that fits all. Expert advice should be sought to facilitate planning because of the cost and time lines involved.
Increasingly we may find that smart investors are looking at IP they can bank on. In the worst case, even if a startup fails because of any unforeseen reason, IP retains its own value and has the potential to be monetized as such, apart from its undisputed value in the valuation of the startups themselves.
(Disclaimer: This is a guest post submitted on Techstory by the mentioned authors.All the contents and images in the article have been provided to Techstory by the authors of the article. Techstory is not responsible or liable for any content in this article.)
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About The Author:
Chitra Iyer is Head of Intellectual Property & Standards at Philips – India. She has an educational background in Organic chemistry, a LLB degree from Bangalore University, Patent law diploma from NALSAR and courses from other institutes. Chitra has a technical background in research (medicinal chemistry and drug discovery) with multinational pharmaceutical giants, spanning over 10 years with experience and expertise in the area of new drug discovery (NCE), generics and poly herbal formulations.
She also has expertise of over 15 years in the area of Intellectual property protection including Trade secret protection, enforcement, IP transactional matters and IP advocacy. Chitra was IP– Leader, India for E.I DuPont before moving to her current role in Philips. She is currently based at the “Philips Innovation Campus” at Bangalore along with a team of IP Counsels, Analysts and other very talented professionals who work collaboratively with Indian and global teams.