How patents not only increase funding but also sales and credibility

How patents not only increase funding but also sales and credibility

When a new company enters the market with a product, they should always have a patent. Not only do patents function to protect intellectual property, they also help startups in other ways. For example, patents can increase the venture capital invested in a startup, giving them the foundation they need to launch a successful business. Patents are also crucial for increasing sales, as well as lending credibility to the proverbial new kid on the block.

Traditionally, patents were the king in the biomedical field. However, patents have increasingly become necessary in the tech field as well, due to several powerhouses that almost have a monopoly on the market. It’s extremely difficult to have a truly original idea, but if you do, you certainly want to protect it from those who would try to shut it down or claim they thought of it first.

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Ultimately, any startup would benefit from having at least one patented idea or concept, and the stability patents create. Research shows that patents not only allow startups to be taken seriously but have lasting effects throughout the lifetime of the startup. Three important things patents accomplish are creating credibility, increasing initial capital, and increasing sales.

  1. Patents create credibility. Angel investors, venture capitalists, and banks all consider patents when choosing which companies to fund. The presence of at least one patent creates legitimacy with these lenders, letting them know you are serious about producing a valuable product. In addition, if two similar ideas enter the marketplace around the same time, the one who holds a patent will be seen as the credible company. Taking the correct steps to obtain a patent affects a startup company from their beginning all the way to sales revenue.
  2. Patents increase startup funding. Experts have found that being granted a patent invariably leads to more startup money. Patents create credibility with investors and predict long-term success. Patents give startups an invariable edge over their competitors. These assets help get a company off the ground. Additionally, they can fund legal disputes protecting the startup from larger companies, increase initial production numbers, and otherwise kick a fledgling company off to a strong start. Ultimately, investments increase business growth.
  3. Patents increase sales. Lastly, and perhaps most importantly, patents increase sales for startup companies. In fact, Forbes reports on a study by Harvard that patents increase sales an average of 51%. The same study also found that startups with patents also correlated with an increase in employment growth. Employment numbers growing to relate directly to the success of a company — you wouldn’t hire someone without first needing them. Patents create opportunities for startups to increase their market shares at a rapid rate. This, again, translates to higher sales and profits. For example, startups may choose to license their patent, spreading production out over several companies and flooding the market with a new technology that, if released slowly, might have died out. An excellent example of this strategy is cell phones: they seemingly became ubiquitous overnight. Because parts of the technology were licensed out, production was able to skyrocket.

Traditionally, patents were considered superfluous. But, patents not being worth the initial investment is a myth that could prove detrimental to your startup if followed. Companies do not fall victim to the patent system, and in fact, patents prove themselves worthy of initial investments over and over again. 


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How patents increase the lifetime viability of your company

How patents increase the lifetime viability of your company

How to get more credibility for your business with patents?

How to get more credibility for your business with patents?