Intellectual properties are the intangible assets of a company which holds a strategic business value in their growth and recognition. Patents, trademark, copyrights, designs, etc. are not only seeked for securing the products and inventions of start-up companies but these assets also enhance the worthiness of the start-ups in the eyes of financiers, investors and their consumers. Let’s take a glance at how IP guarantees value addition for both investors and clients.
Value addition for investors
A start-up company which successfully files and registers their intellectual assets attracts investors and venture capitalists. IPRs often enhance the value of inventions and novelty of the product or invention. In addition, it promises security of their unique products as well as processes from any misuse, counterfeiting and illegal copying. Generally, start-up ventures seek medium to huge forthright capital investment for launching it in the business market and these IP assets play an important role in fundraising.
Venture capitalists, financiers and investors put in their money in start-ups in lieu of either seeking ownership in the company through equity or via collateralized loans. They entrust the potential of their IP Assets which can realistically act as a platform for growth and novelty as required in creating company’s existing as well as future products or processes. It is essential for start-ups to create IP assets that have wider scope which can encompass a variety of innovative ideas or product iterations and can be adopted in accordance with the changes in the market. This way it enables them to leverage their IP assets, especially patents, and enable them to efficiently pivot into other markets or products. If a start-up grows, its assets, both tangible as well as intangible, grows and this leads to increase in the value of their shares. This leads to value addition of the investors too.
Banks or financial institutions, which are funding start-ups against collateral, prefer liquid assets over intellectual assets. Generally, start-ups who are engaged in development of software assets can get easy venture debt lending as it holds better liquidation value than patent assets.
Value addition for clients/consumers
Trademarks, patents and other IP assets help clients identify the brands and companies. It enables them to distinguish as well as compare different brands that compete in the same business vertical. In addition, it gives them an array of innovative products and services to choose from in almost every segment of their life. Start-ups who own IPR can protect their clients and consumers from counterfeit, theft or piracy. This way, they can secure their trust and their trademarks/patents/copyright as it enables them to recognize the authenticity of their chosen product/processes/services. Start-ups can strategically use their IP assets in creating profitable markets for both their consumer as well as themselves.
A start-up having IP assets can reassure their investors to invest their money in their projects and can thereby, protect their inventions as well as investment. Similarly, by promoting their IP assets, they enhance brand value in the eyes of their target customers and give them a greater range of innovative choices to pick from.