Getting your IP ready for the next funding round

2 good reasons to think about how to represent your IP

Companies are expected to protect their IP. If they don’t protect IP that could be protected, they are perceived as not being serious – by existing and potential investors and by other stakeholders.

This is why companies engage IP attorney firms and spend time, money and energy.

However, whilst many companies are doing reasonably well in filing patent and trade mark applications, most companies are doing quite badly representing the status of their IP to potential investors.

Having made effort securing IP rights, there are two very good reasons to think carefully about representing your IP:

  1.  Reducing risk – the IP of companies is reviewed and checked by investors. At early stages, usually only the legal status is checked. Later, some companies drill down to the substance as well.
  2.  Increasing value – IP is part of the company’s value. Showing a strong picture of the IP, and primarily emphasising good news, creates a more attractive proposition to investors.

In our experience, most companies produce poor reports of their IP status that are not impressive to investors. Good news is rarely even mentioned, and the strategy of most companies is templated and not thoroughly considered.

Reducing risk – showing a full and clear picture of your IP

IP tends to be one of the last things on the CEO’s or CTO’s desk. A side task that is regularly overlooked.

Many companies believe that engaging a reputable IP firm is enough, but in practice, even the best IP attorneys need to be engaged with. They need guidance, they need to be asked the right questions, and companies need to know what they want to achieve and what to request.

Starting with the basics, here is what every business must have:

  1.   An up-to-date status report

A company should always have a full picture of the IP that it owns. This is called an IP status report and it should include:

A list of inventions (patent families) and a list of brands (trademark families) owned by the company.

For each invention and brand, a list of all IP rights (family members) – where have they been filed, what is the filing number, filing date, when is the next action due and what needs to be done.

A list of approaching actions that are due.

  1.   The company owns all IP rights

One of the biggest risks facing investors is investing in companies that do not own the IP. This can happen because IP was registered under the name of an inventor before companies were established, new people joined, JVs were created or patents were licensed.

Investors also want to know that future IP that would come from existing inventions will not face problems or issues, so savvy investors would like to see an assignment of all future rights in each family to the company.

Making sure that ownership is recorded properly and all employment and contractor/consultancy agreements are in place is the basic of a sensible IP strategy.

Increasing value – explaining what the IP is about and reporting good news

Almost all IP status reports are excel documents showing which rights exist as per the mandatory list below.

Such lists are mainly a burden for investors. They will be checked for due diligence purposes but do not in themselves create any appetite to invest.

There are 3 easy ways to create a more attractive IP picture:

  1. Include a description next to each patent family and brand explaining what they are meant to protect and why. Knowing what the IP is about helps investors understand what you are trying to achieve and why.
  2. Mention good news – companies often understand that telling investors about granted patents is a good idea. However, it is often clear, long before grant, that the patents are heading in the right direction. Positive GB/EP/PCT search reports, for example, can indicate that the patents are on their way to be granted. Any such piece of good news can be reported with commentary. Furthermore, companies can actively engage in accelerating patent applications when good news are expected. This is rarely done.
  3. Mention future plans – this needs to be done carefully and without disclosing unprotected IP, but investors would like to know that you will keep thinking and generate more protectability and what are you planning to protect.
  4. Budget – generating a budget of expected expenses for IP protection will show your investors that you are calculated and informed and will help you prepare and potentially raise more money. Getting estimates from a single IP firm can be tricky, but possible, and alternatives exist.

Are you ready for the next funding round?

Zeev Fisher is the founder and CEO of Pekama, a company that uses technology to help companies manage their IP and cut costs. Pekama acts as a virtual IP department at no cost to the IP owner. To start finding your own IP, go to the Pekama site. For more information, get in touch.

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Zeev Fisher

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