Funding is the lifeblood of every tech startup, and securing the next round of investment is often one of the major issues keeping startup executives awake at night. After all, it’s a competitive marketplace, one where only the strongest survive. According to the U.S. Bureau of Labor Statistics, only about 50% of startups reach their 5-year anniversaries. A survey of more than 110 failed startups conducted by consultancy CB Insights found that 38% of the companies analyzed went under due to their inability to raise new capital.
You may not realize it, but there is a solution to make your tech startup more attractive to potential investors while obtaining strong, broad, and defensible legal protection against competitors – software patents.
In this blog post, we discuss why your tech startup should be using strategically-focused patent applications to secure targeted software patents that will attract investors, secure additional funding, and even raise the valuation of your company.
Don’t Sit on Your Software Patent Assets
Many software startups fall prey to the myths surrounding patents and patentability, resulting in a deprioritization of applying for software patents. Common myths surrounding software patents among startups include:
- Upfront costs of obtaining software patents outweigh the benefits.
- The costs will eat into the startup’s limited resources.
- Software patents are only good for suing competitors.
- The startup needs to wait until after it secures funding to file software patent applications.
Savvy startups know the exact opposite to be true. Even startups with limited resources can use software patents and a robust patent portfolio to make their companies more attractive to investors. This means that your software patents aren’t a cost center – they’re an asset. Making targeted, strategic investments in software patents as early as possible can help startups attract investors and secure funding more quickly and easily by:
- Increasing the value of the startup — software patents are attractive balance sheet assets, which can be useful when securing loans or pursuing acquisition
- Delivering great value by deterring small and large competitors in your industry from infringing the startup’s technology and products with a relatively small investment – enabling you to charge more for your products and services
- Demonstrating to potential investors the startup’s belief in the value, uniqueness, and quality of its products as well as its commitment to future growth
Tech Startups: What’s Your Moat?
When courting investors, tech startups need to be prepared to answer the question, “What’s your moat?” In other words, what is it that stops your competitors, particularly larger ones with seemingly endless resources, from stealing your software innovations and copying them?
Being outdone by competitors, especially those with massive amounts of resources, is not an uncommon problem for startups. In fact, according to that same survey by CB Insights, 20% of startups surveyed failed because they were outcompeted.
Software patents provide a solution to this problem, particularly if the startup’s moat is developed using a business-driven approach to securing software patents, where the company’s business goals drive its patent strategy. With patents, startups can gain the legal right to block competitors from selling products and services that their patents cover. Patents also deliver great value by giving startups protection, even against industry giants, for a relatively small investment.
The following are business considerations startups should factor into their patent strategy to maximize the value of their patents:
- Identify key product features in software innovations that are unique and keep customers coming back
- Ask yourself what are the valuable elements of the company’s competitive advantage that are patentable
- Pinpoint elements that strengthen the startup’s competitive advantages if patented
The software patent experts at Blueshift IP have helped countless startups raise their competitive appeal by working collaboratively to understand our clients’ businesses, industries, and competitive landscapes to identify patentable innovations and winning patent strategies.
Attracting Investors by Viewing Software Patents Through a Business Lens
Not every patent firm is created equal, especially when it comes to software patents. Drafting successful patent applications for software innovations requires unique experience and knowledge. At Blueshift IP, we apply our backgrounds in computer science and our decades of experience obtaining patents for growing startups to draft software patent applications that meet the rigorous criteria of the USPTO.
Our work has helped startups attract investors and secure larger funding amounts quickly and easily by determining the most valuable and critical patents to secure and filing strong patent applications as early as possible. The patents we have obtained have also served as assets that have increased the value of our clients and enabled them to be acquired more quickly and at higher values than without software patents.
Want to learn more about the value of securing software patents early? We invite you to read our in-depth blog post on What Startups Need to Know About Patenting Software. You can also watch our free webinar Developing Strategic Patent Portfolios for Start-Ups: Tips and Strategies Explored.
If you are interested in learning more about patenting your startup’s software innovations to attract investors, secure funding, and increase the value of your company, please contact us directly.