Authors: Matthew Wahlrab and Craig Rochester
At Boutique Venture Partners, we invest in early detection and early treatment innovations across the Biotech, MedTech, Digital Health, and Health Edtech industries. Our skill is to recognize where the next breakthrough technologies and medicines are being developed. We pay particular attention to early-stage companies that are:
• Developing novel approaches or platforms with solid IP
• Founded by authentic entrepreneurs with deep domain expertise
• Have large growth and societal impact potential.
We leverage our deep connections in the healthcare ecosystem to get early access to innovations. And one of the most crucial elements among the many factors that determine whether an innovation will succeed, or fail is IP. When reviewing an early-stage company, we want to know if they understand and can tell their IP story.
Here are some of the most important ways that IP and IP rights can be used to establish and maintain a strong competitive advantage.
1. IP Can Help to Secure Funding
Investors are increasingly seeking out businesses that have compelling IP and IP potential. A clearly articulated IP strategy assures an investor that a business is aware of the market conditions, the market opportunities and the company’s advantages, and their competitive moat. An investor will also be aware that companies with patents tend to do better than those without. Not just slightly better, but significantly better. A recent USPTO Economic Working Paper Series publication, The Bright Side of
Patents, reported that companies with patents raise $7 million more on average than those that do not. Further, the report evidenced that, on average, each issued patent is worth about $53,000 to the company, and that startups that file for patents are 35 times more likely to be successful than those which don’t.
Investors and funding agencies need to know how their money is being spent. Industry-leading IP management services provider, Rapid Alpha, provides custom IP plans that make it easy for a startup, or any business seeking investment, to demonstrate how they will spend capital, protect technology, and describe the opportunities for return on investment. An IP Plan shows an investor how money will flow from their pocket, into innovation generation and protection, and out into revenue-generating activities. But most crucially, it will also show the investor what the opportunities are for that innovation when it lands in the market, how it will be received, and who the competitors are likely to be.
2. IP Can Help a Company to Enter New Markets
Effectively managed IP can smooth the
entry of companies into new markets. This is because there are aspects of any
innovation that, when effectively documented and protected, may be used in
adjacent or parallel industries or products. For example, a well-managed patent
portfolio is a multi-faceted tool for potentially numerous applications. There
is not just one market-fit for an innovation. This is especially so in the
biotech industry, as biotech companies often leverage the sum of, or parts of,
innovations for new products or clinical indications, and an ever-expanding
number of markets to enter.
3. IP Can Help in Securing Partnerships
Following from the point above, IP
enables a business to effectively engage with partners and collaborators in a
manner that ensures that the company is not giving away the farm as a result of
discussions of a third party. IP protects against copying or exploitation and
ensures that value generated through partnerships is pegged to the valuation of
the company’s stake in the partnership via not just the partnership deal, but
also via the IP rights attached to the company’s patents. for other businesses to approach, indicating
who you are compatible and well-paired with, and who your innovations compete
with.
4. Finding your patent silver bullet
Innovation breeds more innovation. In
IP terms, this can result in an IP cluster, and is a very effective way that
businesses can maintain a competitive advantage. Once you have filed a patent
on an innovation, you can invest in research and development to create
follow-on and linked innovations, or ‘spin off’ patents. These are unique, but
stem from the original innovation. This way, wealth generates wealth, and the
improvements or variations of your inventions are valuable growth opportunities
in and of themselves.
5. IP Can Be Licensed For Revenue
As a market matures, there may be competitors who need a license to your patents for their own products. This is a fantastic opportunity to secure long term ROI from an innovation you developed. Once you have filed the patent, you can effectively lease it out to competitors who need that nugget of genius for their own line of products via a license. In this way, your business can become a building block for the maturation and development of the market. This happens commonly in the biotech industry and is a key advantage of smart IP management.
Boutique Venture Partners
Specializing in early stage investments in healthcare and life sciences.
About Boutique:
We are a team of hardcore scientists and clinicians who partner with authentic founders to create innovative and disruptive approaches that improve health and wellness.
Learn more about Boutique here.
Dr. El Assal is a Scientist-Clinician trained at Harvard and Stanford Medical Schools. Prior to founding Boutique Venture Partners, he was a Research Scientist at the Canary Center for Cancer Early Detection at Stanford University.
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