Do venture capital firms care about IP protections? The answer is undoubtedly yes! For a new startup, the value of the IP may be 80%, 90%, or even more of the total valuation of the company. If that IP doesn’t have strong protections, it puts venture capitalists at a big risk.
You can see this even in reality shows like Shark Tank. The venture capitalists on that show always ask about what IP protections are already in place on the IP. They also want to know if there are any potential or pending lawsuits surrounding the IP. Weak IP protections or pending lawsuits are big red flags. No VC wants to invest in a company where the IP isn’t strong.
Moreover, many venture capitalists prefer that the IP is owned by a company and not by a founder. It shows that the company is serious about capitalizing on the IP. A disgruntled founder who has the ability legally remove IP from the company is another big worry.
Protecting your IP can do more than just protect your business. It can also open the doors to greater valuation from venture capitalists. If you are a startup seeking funding, you should retain the services of a competent IP lawyer and get your businesses registered. If you can make your investors confident about your IP protection then you will have a greater success of getting more funding.
Is your IP strong enough? Greenberg & Lieberman, LLC can help. We have great experience in traditional IP and digital IP law. For more information about our firm, contact our offices.