KISSPatent
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Patent Community - learn more about patents

KISSPatent Patent Community, where you can learn about patents and turn your ideas into profit!

KISSPatent Community

Learn more about patents and turn your ideas into profit!

 

Take our quiz to learn if your idea is patentable!

 

What patents tell investors and the world about your startup

For businesses, especially start-up businesses, innovation is the watchword. Not only do patents keep your ideas safe from other users for a considerable period of time, patents are assets to companies. As a company owner, you need to determine the value of your patents. They have a value that can be pitched to investors as part of the wealth of the company.

There are those actors in the business world who want to weaken patent protection in the name of free trade. Congress is currently considering legislation that would make it hard for startups and inventors to enforce their patent rights. Many small startup businesses consider this kind of legislation a type of legal theft of value.

In the classic American world of business, large companies held all the patents. Startup business were stymied because of their inability to make use of patented products and processes. Startups were the little guys and patents protected the hegemony of the giants. That classic scenario is one of the reasons the government, with all good intentions, began looking for limitations on patents. If your startup gets a patent, it puts your company in the gleeful position of being able to face the large companies on their own terms.

Things like patents are among the intangibles that add to good reputation and credibility. These are important factors when your business builds authenticity and authority in the marketplace. In the interest of countering anti-patent legislation, a study by scholars from the Harvard Business School, New York University, and the National Bureau of Economic Research shows how patents increase sales for startups. They conclude that patents,

“…help startups create jobs, grow their sales…[act as] a catalyst that sets startups on a growth path by facilitating their access to capital.”

Having patents in your company resume tells the story of an innovative and creative company. A patent is the traditional industrial/scientific embodiment of big leagues, of true participation. A patent for a business is like publication for a writer. Companies with patents are real players, and perceived so by potential customers who look for companies with authority that can give them something out of the ordinary.

In concrete terms, a patent signifies a novel product that can be added to the catalog of things to be sold. This particular new product will not be obtainable anywhere else. This singularity can be converted into money. Having a range of novel and unique products is bound to make your company an attractive place for customers. Studies suggest that companies with good patent coverage can increase sales between 5 and 21 times (cf., “Intellectual Property and Startups,” by Mark Stignani, schwegman_thought_leadership.pdf).

Many businesses increase sales by franchising or licensing their patents. Having patents presents opportunities for new business models. The independent startup company with a patented product or process can collect revenue from licensing the patent rights, in essence, licensing the ability to use the invention. Although, any product or process can be licensed, the uniqueness of the patent provides extra value to your license.

  • Customers for licenses can be marketed through magazines or trade shows where you can find companies looking for your product.
  • Online manufacturer databases, such as the Thomas Register” list companies that use or need products like yours.

The marketing of a product license has a life of its own.

  • Start with sending a marketing letter to companies you have screened as having a potential interest in your product.
  • The marketing letter should state that you willing to license or sell the patent to your invention. Ask for a return call or letter. Include a brochure.
  • Follow-up potential buyers with a phone call after a month.

Make sure you obtain signatures on a non-disclosure agreement before you go into detail about your invention. Negotiating such licensing agreements can be tricky. Many startups get legal help during the licensing process.