Numbers don’t lie – your IP matters a lot

It is axiomatic that intellectual property can be an asset to a business.  But, a recent study out of Europe resulted in the data to prove it. Researchers for the European Union Intellectual Property Office looked at the relationship between filing for intellectual property rights and start-up’s access to financing at various stages. European Union Intellectual Property Office, Patents, Trade Marks and Startup Finance ( 2023), available at https://www.euipo.europa.eu/en/publications/2023-startup-finance [hereinafter “EUIPO Study”]. The data showed that companies that have multiple types of intellectual property, in this study specifically patents and trademarks, received the highest amount of funding. 

Early-stage funding. Start-ups with patent and trademark applications were 10.2 times more likely to receive early-stage funding. EUIPO Study at 12 & Figure E3. The amount of funding received was “considerably higher” than companies that did not have patent or trademark applications. EUIPO Study at 38. In other words, simply filing the application increased the odds of funding and the amount of funding for early-stage companies.

Late-stage funding. The data on late-stage funding also showed that companies with at least patent and trademark applications were more likely to receive funding.  Interestingly, however, at this stage, companies with trademarks received most of the funding.  EUIPO Study at 38.  While this reflects the real value of trademark registration, it also reflects the fact that companies using trademarks have some product or service on the market. Thereby allowing investors to gauge sales and the related value of the investment.

Exits. There were similar results for successful exits from start-up companies too. “The filing of patent and/or trademark applications is associated with a more than twice as high likelihood of successful exit for investors.”  EUIPO Study at 14.  The highest likelihood of a successful exit was for companies that had both patent and trademark applications.  

This data does not mean that start-up companies should go on an application filing spree. Intellectual property costs money – even a simple patent filing can cost almost $10,000, and most of the time, a patent will cost much more. Companies intending to raise money should instead focus on cultivating a strategic intellectual property portfolio. One that takes into account its resources and growth strategies.

“Disclaimer: Attorney advertisement. This post is not intended to be legal advice and is simply intended to be informative.