A start-up can protect its ideas with patents and trademarks. The problem is, of course, the costs. It would be nice if patents and trademarks brought other advantages in addition to the protection of the idea, for example in financing or in the exit. A study by the European Patent Office provides an insight into this.
Study on the connection between funding of start-ups and IP rights
The European Patent Office has recently published a study that sheds light on the connection between patents, trademarks and the financing of start-ups (the link to the study can be found below). The study shows that 29% of European startups have registered IP rights (patents and trademarks).
10% of startups in which VCs invest in the seed phase have filed a patent application. In the early growth phase, this share is 28% and in the late stage (Series C and beyond) it is 44%.
Patents increase the likelihood of funding
The study shows that filing patents and trademarks in the seed or early growth stage is associated with a higher likelihood of later VC funding. Patents thus not only protect ideas, but also help raise capital.
The effect of higher funding probability is particularly pronounced in the early growth phase. Here, the probability of financing is 4.3 times higher for start-ups that have registered a trademark. The probability is even higher if a start-up has registered a patent, namely 6.4 times higher.
Higher probability of a successful exit for start-ups with patents and trademarks
Filing for patents and/or trademarks is more than twice as likely to result in a successful exit. The highest likelihood of an IPO or acquisition is observed for startups that have filed both patents and trademarks.
Important tips when seeking patent protection
If start-ups want to protect their inventions and trademarks and increase the likelihood of funding, they should invest in patents and trademarks as early as possible. In the case of patents, it is important that the idea has not been made available to the public by written or oral description, by use or in any other way before the patent application is filed. Otherwise, the invention is prior art and can no longer be patented. If the invention is based on software or AI, this can also be patented. However, compared to classical technologies, additional requirements must be met.
For start-ups with patents and trademarks, the probability of funding and an exit is higher.
If you have any questions about patents and trade marks, patent attorney Michael Schüller from our partner WINTER BRANDL Patentanwälte mbB (www.wbetal.de) will be happy to help.