An Intellectual Property Strategy for early funding rounds

Initially it becomes quite difficult to attract angel investors and venture capital (VC) funding because sophisticated investors do not invest unless they see a unique and valuable opportunity. VC firms understand the importance of IP in valuing a business. The appropriate IP protections enable businesses to maintain a competitive advantage, mitigate risks and raise outside funding. There are a few things that venture capital firms consider in an early-stage company’s IP strategy before investment.
Of course, every investor is different and every deal is different, hence your strategy may need some twitch.And, for later stage funding rounds, consideration may be different where investors look for more mature IP portfolio that includes issued patents and meaningful scopes.

What investors consider before investing

Investors often look for unique innovations that can be protected and monetized. Investors typically assess an invention using the following criteria before investing:

You have a solid IP strategy

All you need to know is that what IP you need to protect and how to protect that IP. You should have a clear-cut idea so as to how your IP fits into your overall business strategy and how it will be monetized.A solid IP strategy that is aligned with your business goals includes a forward-looking plan for capturing valuable IP in your industry.
As for an example, you might plan to develop a market for your product or a process, stop others from copying it and dominate the market. Or you might plan to develop strategic partnerships and license your patents to other companies.
As a part of your plan, make sure to have a solid IP counsel to help execute your strategy. Investors very well know that a competently drafted patent application always hold up to scrutiny in a litigation context and IPR proceedings.If your invention seems to be relevant in foreign market, you will need to plan ahead to protect your international rights. There is a limited timeline to protect your patent outside, hence you will have to make sure to incorporate foreign protection into your plan.

Your competition

How does your invention fit into the market with respect to existing and potential competitors? IP protections demonstrate your thought process about whether your product is viable into the market and how to distinguish your product in the market. IP assets are valuable and independent of your business operations. IP assets work for you even without your notice at times.
For example, they reduce and deter industry competition which makes your competitors think thousand times before taking a risk of infringing your IP by entering into the market.IP assets also protects you from accusations of patent infringements by your competitors. You will be able to use your patent portfolios to resolve and avoid litigation by cross-licensing strategy to use your competitor’s technology.

Own it

Prior to attracting venture capitals for funding, it is critical to own the IP for your technology strategically. You should be free fromobligations to competitors and other third parties. Properly document ownership of your patent applications and issued patents. Have strong invention disclosure records, non-disclosure agreements and non-compete agreements.
Additionally, you should refrain from signing any ill-advised agreements that could compromise your IP ownership, such as agreements granting broad license to your competitors.You should always be handy with catalogue of documents that establish ownership of your patent.

Strength of your IP

Investors will always be interested in the value and strength of your IP. Your patent application must be able to hold up firm under close scrutiny. If your patent application claims are pretty broad, your application may land up in nearly endless number of prior art references cited against it. And at the same time your patent claims should not be too narrow, which may make an easy way for your competitors to design around your patent.
Investors look into your track record and might be wary of businesses that have dropped a high number of applications. More importantly, if an investor does not have a prior experience with patents, they may just kick the tires during due diligence to make sure that there are no major issues in the patent application or issued patent before investing. If, howeveryou are going for a significant funding round, then the investors will likely to do an in-depth review. Hence, make sure that you are well prepared to withstand their scrutiny before investing.