Start-up company value enhanced by patents – How patents add value and how to delay patenting costs

Start-up Value and Patent Portfolio

Often in creating a start-up company., particularly in technology, the owners are looking for an eventual buy-out by a larger company (Google, Facebook), and even if they are not, the company must have value in order to receive investment. Value is gained by a competitive advantage, and one of the most power competitive advantages is to exclude others from being able to reproduce your idea (at least not without royalties to you). Often, if the company goes under the patent portfolio is the only real thing of value, which can provide some much-needed capital to the owners or investors.

A family of patents covering the idea is the best approach to protecting your competitive space and adding value to the company. The patents can later be sold as part of the company, and often the lion’s share of the value of a company is the intellectual property. Patents can also stand as collateral and guarantee for any investor, such as a VC or angel, who is providing funds. When a technology is no longer being pursued by the company, the patents can be licensed to provide a stream of revenue, or sold off to provide capital back to the company.

How to delay patent filing costs

While a patent filing strategy can be expensive, with the right patent attorney the patenting costs can be delayed until the company is profitable or pending sale. The start-up will benefit from the value of the patents, without having to dispense limited funding at the outset. One way to lower the costs are to drag them out – file a provisional application first, then before a year is up, file a PCT application, then after eighteen months consider the value of that patent to your current technology before engaging on an expensive filing strategy….

Feel free to contact me for more information.

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