New EU Study | Startups with IP are 10 times more likely to secure funding
The EPO and EUIPO released a new joint study showing startups who protect their IP increase their odds of securing funding by over 1000%.
The recently published study shows just how important IP is when it comes to riasing venture capital (VC) for both seed stage and early stage companies.
What does the study say?
The biggest take-home message for startups is that filing both trademark and patent applications has the highest impact on securing funding. Simply filing a trademark application makes European startups over 4 times more attractive to VC funders, which rises to 6 times more attractive if it is an EU trademark. However, a joint patent and trademarks filing strategy can increase the likelihood of securing funding by 10.2 times!
Not only are startups that file trademark and patent applications more likely to receive funding, they also receive “considerably higher sums”. Additionally, the median exit value of these startups from a successful initial public offering (IPO) or acquisition was up to 6.3 times higher. The median exit value from an IPO is EUR 385 million for a startup that uses both trademarks and patent rights, compared to EUR 16 million for an aquired startup that does not have registered IP.
Currently, only 2% of startups have filed for both trademark and patent protection. With a 10.2 times higher likelihood of securing funding, 3.2 times higher likelihood of securing a successful IPO or acquisition, and a significant increase in the value of startups just from registering IP, we hope more startups will file patent and trademarks applications in the future. While there are official fees from IP offices and additional costs involved in filing trademarks and patent applications, the study shows these costs can potentially be recouped from increases in future funding and valuations.
How do I file trademarks and patent applications?
Trademarks identify you in the market, distinguishing your brand from competitors’ goods and services, such as your product name, logo, slogan, or domain name. Registering your trademark can give you the exclusive rights to that mark, helping prevent copycats from using your brand. You can find out more about filing a trademarks in Norway with the Norwegian Industrial Property Office or with the EUIPO. There are multiple requirements for filing a trademark, including a list of all the goods and services for which you wish to register your trademarks, and a description. Be careful! Your trademarks will need to be distinctive and identify you or your product, which means it could be rejected if it is similar to other slogans, names, or logos. More information on trademarks, the requirements, and how we can help can be found here.
Patents are directed towards protecting all technical inventions, such as physical objects, biochemical processes, new materials, or software-based innovations. A patent can give you the exclusive right to your invention, preventing others from exploiting your ideas. You can find out more about filing a patent application with NIPO here or with the EPO here , and requirements include: a description of your invention; claims defining the scope of protection that you are after; an abstract (a short summary); and drawings to help others understand your invention. Be careful! Your patent application will need to be novel, inventive, and technical, which means it could be rejected if someone else is doing something similar. More information on patent and how we can help can be found here.
To increase the likelihood of your trademarks and patent applications being granted, the applications should be drafted by professional attorneys to ensure they meet all of the legal requirements, maximising the value of your IP. Bryn Aarflot specialise in working with startups and have special startup discounted rates. Read more about our dedicated startup services here.
What next?
There are many additional IP rights that can help add value for startups, including design rights and trade secrets. An overarching IP strategy, or a plan concerning your IP rights, is often valuable and reassuring to investors. Such strategies do not need to be lengthy or comprehensive, but they should be documented to demonstrate to an investor that every effort is made to safeguard your IP assets, ensuring the company retains ownership of its innovations in the future.
Written by
Benita Mackay
Patent Advisor Masters (Physics)/Ph.D. (Artificial Intelligence and Bioengineering)
