A recent study by the European Patent Office (EPO) and the European Intellectual Property Office (EUIPO) has again highlighted the link between intellectual property ownership and funding.
The likelihood of funding
Filing patent and trademark applications during the initial stages of development significantly increases the chances of securing venture capital funding. This phenomenon is particularly pronounced in the early stages, with startups that filed for trademarks experiencing a 4.3-fold higher likelihood of funding, and those filing for patents enjoying a 6.4-fold higher likelihood. Startups that filed for both trademarks and patents demonstrate the highest probability of securing funding, with a remarkable 10.2-fold increase in likelihood in both the seed and early stages. Also, when the IP in question is EU-wide (such as EU trademark), the likelihood of funding increases even more.
The level of funding
The study also found that companies with intellectual property get much higher funding. For example, in the seed stage, the median funding amount without any IP was 263,435 euro. For companies with patents, the median amount was 590 007 euro, and for companies with trademarks 649,101 euro. The highest median was for companies with patents and trademarks, 912 475 euro. The sample contained over 40,000 seed round investments. Having a patent or trademark more than doubles the amount received by companies in the seed round. Having both patent and trademark more than tripled the amount.
The positive link between IP ownership and the level of funding existed also in further funding rounds, but the difference was not as striking. This finding is in line with other studies on the topic that show that IP ownership has the highest impact on the early funding rounds.
Conclusion
Not all companies have patentable inventions, but every company has a brand name they can register as a trademark. Registering a trademark increases your chances of obtaining funding, and getting more money.
Read also
Protect your IP before the first funding round to get more money – here’s why that works
5 reasons why investors love intellectual property
Patents, trade marks and startup finance
