Last year multiple records were set in the venture capital market. We saw the largest venture capital deals in history. It was also a year that saw the most amount of money invested in the highest number of private tech companies.
These trends show no signs of slowing down, either. This is excellent news if you are looking for investors and planning your VC funding pitch. But how do you ensure that you get the most amount of investment capital possible for your startup?
The key is to create measurable value. One way to do this is by applying for a patent.
Improve Your Funding Chances
Take an honest assessment of your startup. What are you asking VCs to invest in? Is it the new business, a product, or you? Acquiring a patent can create a tangible asset for potential investors to consider.
Not only does it give VCs something to invest in, but it also lets them know that their investment is protected. A patent will give ownership to your unique idea. A competitor can’t come in and take market share by copying.
Startups looking for investment capital tend to have a 53% better chance of securing an investor when they have patents protecting their IP.
Increase Your Asset Portfolio
Patents that you gain approval for will become a part of your startup’s portfolio. These assets will have a valuation that contributes to the total value of your startup. So the more patents you have, the more value you add.
Just one patent can increase your funding-round valuations by at least 20%.
Boost Sales Volume
Having a patent won’t magically boost your sales. But those companies that take the time to patent their inventions tend to perform better in the market.
Companies that have at least one patent tend to have faster sales growth than those without one. Many startups see sales growth that is 50% higher than their counterparts without a patent.
When you can increase your manpower from within, you can grow more quickly. You also have more eyes on the daily functioning of your business. This means problems are caught and resolved sooner, which results in fewer impactful setbacks.
According to the USPTO, startups that obtain patent approval experience an increase in their employment growth. They can expect a gain of 36% over the following five years.
Plan a Successful Exit
What is your end goal for your startup? Do you hope for an IPO? Or maybe you want to get acquired by a large competitor? Having a patent can increase the odds of either of these things happening by 153% and 84% respectively.
Keep in mind that a patent application is not a fast process. So it is not wise to wait. This is an investment that will strengthen your IPO offering and give you negotiating power in acquisition negotiations.
Create a Failure Safety Net
It’s a sad truth, but many startups fail. No one wants theirs to be the one that fails. You can soften this blow by owning saleable assets such as intellectual property. Venture capitalists will look for patents as a way of recouping their loss.
Think of it as a safety net for them. They see your business, but the real value is in the patents. So having a few patents in your portfolio will encourage a more cautious investor that wouldn’t have considered your startup otherwise.
In fact, almost 200 patent packages were sold last year. That is more than any previous year. This tells you that there is a thriving market for selling patents.
Increase Your Startup’s Value
Getting approval for a patent may seem like an excess expense when building your startup. However, this is one investment that you can’t afford to skip. Not only will it protect your intellectual property, but it will increase the total value of your startup and the odds that you will achieve VC investment.
Contact us today and let us help you protect your startup.