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Topic of the week: What is your startup valuation with patent or without patent?
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EXPLORE
The Impact of Patents on Startup Valuation: A Key Differentiator for Investors
In the vibrant and ever-evolving startup ecosystem, understanding your company's valuation is not just a matter of corporate vanity - it's a critical component in attracting and securing the right investors. The presence of patents is an often-overlooked element among the myriad factors that go into this valuation. The statistics speak volumes: startups with patents command significantly higher valuations than their non-patented counterparts, at all stages of funding.
The Power of Patents in Early-Stage Financing
The valuation gap based on patent ownership is most pronounced at the angel investment stage. Here, startups armed with patents receive an impressive 93.2% higher median annual valuation than those without patents. This significant difference underscores the immense value investors place on intellectual property (IP) at the earliest stages of a startup's journey. For angel investors, a patent is not only a legal safeguard, but also a testament to the startup's ability to innovate and its potential to disrupt the market.
Maintaining value in later stages
This trend of increased valuation for patent-holding startups isn't limited to the early stages. Even as a startup progresses to later-stage funding rounds, the presence of patents continues to play a significant role. Statistics show that startups with patents enjoy a 51.2% higher median annual valuation at these advanced stages. This enduring advantage underscores the long-term benefits of patent ownership, providing an ongoing boost to investor confidence and perceived market value.
Beyond Protection: Patents as Signals of Innovation and Growth
Patents do more than protect a startup's unique ideas and products from competitors; they serve as tangible assets that are highly attractive to investors. Owning a patent signals a startup's commitment to innovation, long-term growth and a competitive advantage in the marketplace. For investors, patents represent a lower risk profile, indicating that the startup has something truly unique and potentially game-changing. This perceived reduction in risk is often reflected in their willingness to assign a higher valuation to the startup.
A Strategic Asset for Startups
In conclusion, the presence of patents in a startup's portfolio is an important determinant of its valuation. The statistics paint a clear picture: having a patent can nearly double a startup's valuation in the early stages and continues to add significant value as the company grows. For startup founders, this underscores the importance of not only innovating, but also securing legal protection for those innovations. In the eyes of investors, patents are not just legal documents; they are indicators of a startup's potential to lead and redefine its market.
Note: Our co-writer Mustafa is organizing a free webinar about patent valuation, if you are interested in this topic, it is a must go event which will be organized online. You can register here. (54 participants have already registered).
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WATCH
⏯️ Videocast #13: Patent Insights and News in 20 Min.
Welcome to our new format of videocast series. In this fast-paced, 20-minute session, Arne Krueger and Mustafa Cakir delve into the world of patents, bringing you the latest news, trends, and insights from the previous week.
It will be livestreamed on our Linkedin page and YouTube channel.
Please register on our Linkedin event page to save your seat.
Mark your calendars and join us.
🗓️ 01 February 2024 at 14.00-14.20 CET
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📑 READ top 10 global patent news
of the week:
1️⃣ Apple will sell some watches without blood oxygen feature after US court ruling.
2️⃣ Google faces $1.67 bln damages demand at AI-related patent trial.
3️⃣ Patsnap launches CoPilot, its new AI assistant.
4️⃣ UK invalidates two patents apiece for Abbott and Dexcom.
5️⃣ Do patent litigation firms need to prepare for difficult times?
6️⃣ IP Management Market was valued at $8.6 billion in 2022.
7️⃣ Nelist quickly jumped 10% after a trial of patent lawsuits with Micron was canceled.
8️⃣ InterDigital signed Patent License Agreement with Samsung.
9️⃣ Philips and OPPO settle patent licensing dispute.
🔟 The End of the Road for DABUS.
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