Intellectual Property Still
Matters to Venture Capitalists

IP News and Information

There are many universities, corporations and individuals that own intellectual property rights. While it is great to own IP rights like patents and trademarks, many of these entities are simply holding onto their IP without making it work for them. Some businesses hold their IP close because they fear that competitors might learn their trade secrets or even try to infringe on them. On the other hand, there are plenty of other organizations and individuals that would like to monetize their IP, but they don’t know how, or they can’t find an interested investor, buyer or licensee. When it comes to selling or licensing IP one of the best bets IP owners have is to pitch their portfolios to venture capitalists.

Venture Capitalists Do Want IP

Venture capitalists have a lot of money and they are always looking for solid investments. However, what kinds of companies are they looking for and does intellectual property even matter to these high asset investors? The simple answer is yes; venture capitalists definitely still care about intellectual property. In fact, according to an article in IP Watchdog, industries with a strong IP-focus have wages that are 50 percent higher than industries with a weak IP-focus. In addition, capital spending and sales are more than double in IP-focused industries compared to industries with a weak IP-focus. However, it’s not just a matter of whether or not a company has IP. Venture capitalists aren’t basing their investments solely on the amount of IP a company or other organization owns.

Do Your Prep Work Right

There are several important factors that must be in place for a venture capitalist to realistically consider a company’s IP. One of the keys is obviously how much the IP is actually worth, which is determined by several factors. That’s why it’s important for IP owners to avoid making mistakes that could cost them a great monetization opportunity with a venture capitalist. Having provisional patents, together with weak legal claims, is a not a recipe for success in most cases. That means not only do startups need to secure patents but they also need to due their due diligence to ensure that their IP strategy is sound and that it’s appealing to a would-be investor.

Ownership Is Vital

It’s important for IP owners to secure patents but they also need to lay the proper groundwork in order to breed success. Another important factor that almost all venture capitalists will investigate is who actually owns the patent. It’s important for startups to actually own or have licensed their IP. In other words, the business should have full ownership of the IP so there are no possibilities of lawsuits from former employees or from company founders. Therefore, it’s important that the startup unequivocally own the IP and not the company founder. This can make for bad circumstances if the founder decides to leave the company and takes his IP with him.

Use An IP Broker

The bottom line is that venture capitalists still care about intellectual property and they are still looking for opportunities to acquire IP with the intention of monetizing it. If you have IP that you are trying to license or sell, one way to approach venture capitalists and other potential buyers is to use an IP broker like IPTrader. We can help you find buyers that are interested in your IP. Please contact us if you would like to learn more.