Scrutiny of intellectual assets
- publish258
- Dec 3, 2023
- 2 min read
Updated: Apr 3
After seed funding, the scrutiny of your intellectual assets will intensify, as investors expect to gain easy access to your data room to check for themselves what value your portfolio is creating, says Sarah Grant at Strategem
Sarah Grant
As a start-up, seed funding gives you an initial period of development for your products and/or services. However, it also sets the clock ticking for preparing for the next funding round.
Following launch, you will feel exhilarated by raising the money required and confident that the ideas behind your venture will carry you through to the next funding round. However, this is a pivotal point in terms of the intellectual assets. It is risky to assume that these assets will be sufficient to satisfy the next set of investors.
Scrutiny during later funding rounds becomes more intense and you will be expected to demonstrate a more mature portfolio of IAs. Particularly in life-science and high-tech start-ups, investors want to see not only a growing portfolio of IAs, but also one that adds value to the company.
Knowing the state of the foundational assets, whatever they are, and how they will be pursued, forms the backbone of an asset strategy for your venture and its future funding. It’s likely to include an awareness of the IP landscape surrounding your foundational assets and a readiness to create layers of IAs to maximise protection.
At the next stage of funding, investors are expecting to see that the foundational assets, if critical to the business, have been nurtured and exploited and that new IAs have been developed and potentially protected. There is an expectation from investors that ventures have maximised the original investment with tangible results.
Whilst developing new IAs, ventures should fully consider how these assets are to be protected, even if that is through unregistered routes, such as keeping innovations secret. Further, a new venture should start to build around their original innovation, either by maximising a platform or developing further incremental improvements. Innovations in products, services, processes or technology can normally be protected by IP, either as a sole type or as a blend.
To make the most of seed funding, you will know precisely what IAs you have, flaws and all. From that starting position, you can develop a strategy and improve your portfolio, be that removing assets, strengthening the assets with further innovation, filing for new IP or branding. Due diligence at your next funding round will be more intense. If you can show the evolution in your portfolio and a coherent strategy, it will add to the value of your offering.
In a recent trend, investors expect easy and managed access to all your IAs in a well-documented manner, notably via data rooms. In these, each part of the portfolio is laid out in an easily navigable matter, and all questions neatly addressed in advance by providing any additionally required information on matters such as ownership and licensing positions. The more aware and prepared you are, the more attractive you will be for your next stage of funding.
• The full version of ‘Intellectual assets for early-stage ventures’, an article by Sarah Grant, chief executive of Stratagem IPM, appears in ‘Winning with IP: Managing intellectual property today’, fourth edition, Novaro Publishing, November 2023. More details here.
