For tech startups, their technology is everything. While companies have tons of options when it comes to how they build their business model, it’s all underpinned by the value of their patents and their broader IP portfolio.
Understanding the value of patented technology is key to making smart business decisions. Should you accept an early buyout offer or put your money on your own success? How much is your patent really worth, and should that affect the valuation of your company when you start seeking investors?
Whatever your industry, new technology is at the heart of innovation. A patent protects that technology from your competitors and secures your business’s advantage.
Innovation Is the Key to Business Success
New companies today rely on innovation to make their mark in the world. Without bringing an innovative product or service to the table, too many businesses are suffocated by the existing competitors, especially in industries with deeply-entrenched major players.
Look no further than a company like Nobul for an example of how business success starts with innovation in a highly competitive industry. Nobul is a digital marketplace that connects real estate agents with consumers. In a nutshell, it applies the Uber model to real estate, an industry that has long been resistant to change and where there is a lot of money at stake for major agencies.
Founder and CEO Regan McGee started Nobul with patented technology that was built out into an open digital marketplace, and the company continues to keep its innovative edge by investing in blockchain solutions like smart contracts.
How to Get a Patent
It’s not enough to simply write a program and get it patented. There are strict criteria a new technology has to meet before it can become a patented technology. It must be:
- Useful
- Novel
- Non-obvious
Many patents are issued for incremental improvements, i.e., a novel and non-obvious improvement on existing technology. There are also pioneering patents for technologies and processes that are completely innovative and change the way you do business.
Patent Valuation
It’s essential to understand the value of your IP portfolio to create a sound business strategy or a patent monetization plan. Patent valuation is a complex process that may require an expert, but when you’re getting funding in exchange for equity, you want to have a fair estimate of what your patented technology is worth.
Some patents derive their value from their potential to generate revenue, driving purchases or increasing the price at which a service or product can be offered. A patent may also increase efficiencies or reduce expenses for the owner in other ways. Another important factor in the value of a patent is the size of the market for the product. Niche products may have a more limited value, while the ceiling can be higher on technologies that have a wider appeal.
Startups that have patented technology benefit from their reputation as innovative leaders. Depending on the technology, a patent can create real value for a business just getting started. Before you start talking to potential investors, get an accurate valuation of your patented technology.
