Starting a company is challenging at the best of times. As such, it is critical to give yourself every possible advantage.
It’s this reason that many of the world’s most successful startups love patents. These give them a monopoly over a specific type of product, allowing them to win market share without other brands muscling in on their space.
Company executives like Kotaro Shimogori show how real the results of proper patents can be. If nobody else can use your inventions, it can protect your margins and lead to higher profits.
So, why specifically do startups love filing for patents?
Attracting Investors
One reason is to attract investors. Startups that can show that they have a technology or design that nobody else can build are at a substantial advantage. People lending to the company know there is a higher chance of getting their money back, so they are often willing to plow more into the firm.
Attracting investors is critical for startups because without them, it’s hard to make headway. There’s no money available for expansion to get to the point where they break even.
Gaining Competitive Edge
Gaining a competitive edge is another reason startups love patents. If they can deter competition from entering the space, it can make their lives easier and allow them to charge more for what they do.
Gaining this competitive edge for a company with no funding or functioning business model is almost impossible without IP. Investors have no reason to put their cash into the company to help it grow, so why would they?
Developing An Exit Strategy
Another perk is the fact that successful startups use patents as exit strategies. It is far easier to sell or IPO a company when it has real intellectual clout behind it that will protect the new owner.
Developing these exit strategies takes time and sometimes multiple applications. Because of this, it is worth working with professionals who understand the process from the ground up and can help you.
Ideally, you want to go into the business venture with your exit strategy fully formed. You should understand when you want to get in and when you want to leave in detail.
Enhancing Brand Credibility
Sometimes, IP can also enhance brand credibility. If you have a technology that nobody else in the industry can access, that sets you apart from the vast majority of firms in the minds of consumers.
For example, Dyson vacuums did this when they developed the bagless design. Their new approach was patented and so successful that it took over the market.
Using Legal Power
Finally, startups love patents because they let them leverage their legal power. They can use them to fight back if competitors steal their ideas or infringe on their IP.
The legal consequences of foul play like this can be substantial. Many startups have received enormous sums of money from other businesses in compensation through legal action.
Once you have this legal power, you can ensure your IP remains foremost in your industry.
