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“IP can make up a considerable proportion of a company’s value”
Many industries use patents, trade marks and copyright to protect their intellectual property. At the same time, start-ups often find it difficult to turn these IP rights into capital to support their growth. There are some exceptions, however, as a study by the Swiss Federal Institute of Intellectual Property (IPI) and the World Intellectual Property Organization shows. In an interview, Eiman Maghsoodi, an economist at the IPI, reveals how start-ups can attract investors.
How do Swiss start-ups fare in terms of financing?
Well, companies don’t just own real estate, machinery and inventories. They also have intellectual property (IP) rights, such as trade marks, patents and designs. IP can make up a significant proportion of a company’s value. Despite this, start-ups in particular often fail to use their IP to attract external funding.
Why can start-ups not find enough investors?
It’s certainly – but not only – due to banks and regulatory authorities, who often don’t consider IP to be sufficient security. This makes access to traditional financing options such as loans more difficult. However, according to the study, there are other instruments, such as venture capital, that include IP as an important factor in financing decisions. The entire IP financing market in Switzerland is still in its infancy. At the moment, companies in high-tech industries are the main beneficiaries.
Do start-ups know how to manage their intellectual property?
As a rule, yes. But there are always exceptions to the rule. In some cases, some companies don’t know how to strategically manage IP. This is where the Swiss Federal Institute of Intellectual Property comes in. It produces studies to highlight the various aspects of IP and increases awareness of IP issues by providing information, training and support services.
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How can start-ups increase their chances of attracting investor funding?
The strategic management of IP rights is key. This ranges, for example, from applying for protection before revealing your idea at a conference, to extending the geographical scope of protection. You can ask yourself questions such as “What can I and do I want to protect in which countries?” The IP strategy you then create is an important factor in whether investors will put money into your start-up. A study by the EUIPO and the EPO even shows that there’s a strong correlation between patents (and trade marks) and investment.
