What’s the relationship Between Intellectual
Property and Venture Capitalists?

IP News and Information

Venture capitalists are often what make the world of start-ups and entrepreneurs go round. These ultra-wealthy individuals and firms step in when new companies are or inventors are trying to get off the ground, but don’t have, and can’t find, the financial resources to get going. So what is it that venture capitalist are seeking? Obviously, their money is important to them so they don’t typically give it away for free. When they invest in a company or a product, or even an individual, they are expecting something in return. In fact, venture capitalists always have their eye on the return. They don’t buy with the intent to break even. They always look to buy low and sell high. So, a valuable return on their investment is the ultimate goal.

VCs Looking to Invest in IP

With that backdrop in mind, what type of investments are venture capitalists looking for; where are they putting their money? These days, it appears that the answer is in intellectual property. Companies have a lot of different assets; some of those are tangible and some of those are intangible. However, over the last 30 years the percentage of S&P companies’ intangible assets has jumped to about 80 percent. That means IP assets account for more than three fourths of all assets for many of the world’s top companies. That also means that in many cases IP contributes more value to a company than all other assets.

It Must Be the Right IP

So what are venture capitalists looking to invest their money in? The answer is intellectual property. Therefore, “the importance and value of a company’s IP is paramount to its success,” notes IPTrader president, Arlen L. Olsen. But remember, venture capitalists are always focused on the return. Venture capitalists want big returns and they understand the importance of the cost of customer acquisition. That means the value of the IP will include the cost of getting it to the market. Therefore, they choose their IP wisely. If your IP has a lot of quality and marketability, then it can be a huge advantage to your business. On the other hand, if your IP lacks any real commercial appeal, or it will be extremely costly to bring it to market, then it has very little chance of becoming a financial winner, and in fact, it can even be a liability.

Managing IP Wisely

Managing IP assets is also extremely important, both for companies that own IP and the venture capitalists that invest in them. It’s not enough just to have IP; venture capitalist must understand why the particular IP they have invested in is valuable to the company’s business and to the sector in which it operates. It’s important to understand how to protect the IP, as well as how and when to monetize it at the appropriate time.

The ROI Is the Key

The bottom line is that intellectual property is an important aspect of any modern company. With the right IP companies can create a lot of value and revenue for their bottom line. They can also attract the right venture capitalists to invest in their business, which will help them grow and maintain a strong position in their industry. The amount of time and money venture capitalists will invest in IP will depend greatly on how much return they believe it has. In any case, the fact is venture capitalists are looking for more opportunities to invest in IP; and they are looking for the right IP that will bring them the largest return on their investment.