Event highlights: using intellectual property to add value to your startup

Event highlights: using intellectual property to add value to your startup

As part of our virtual events programme for members, we were joined by the Trade Mark Owners Association (TMOA), a specialist in creating and protecting value for entrepreneurial businesses.

Plexal’s managing director Andrew Roughan sat down with TMOA’s co-owner and managing director Paul Hayman and non-executive chairman Charlie Cannell to discuss the value of intellectual property (IP) for startups and entrepreneurs.

Watch the full event and read about the advice they shared.

Protect what’s valuable and continually assess your point of difference. “We live in a beta world” where technology is always being iterated, Charlie told us. You need to constantly re-evaluate what your proposition is as you develop your product. What the “secret sauce” that keeps customers buying from you?

Once you know what your core product and point of difference is, you have something to protect. Charlie said: “At the core of that then is establishing what is our platform for IP within the business and making sure that we’ve got a strong foundation, that we know where our territory for ownership is, where our edges are, where we might want to go. But then protecting that and making sure somebody else doesn’t encroach.”

Focus on your brand, innovations and know-how. Paul advises startups to consider whether they could trade without their brand, code, innovations, know-how and “the stuff that you keep confidential”. If you can’t trade without it you need to protect it as that’s where your true value lies.

Your brand can be anything that personifies or uniquely identifies your product like names, logos, registered designs and domain names. Innovations worth protecting include ideas, user interfaces or code. And in a situation where you have satisfied a piece of regulatory compliance, you’re in a territory with fewer competitors. Successful protection of this kind of IP gives you a competitive advantage, supplier power and enables you to charge premium price.

Ideas plus rights equals value. In today’s knowledge economy, ideas are what make a business valuable. In fact, Paul told us that 80% of the value of businesses is based on the value of their intangible assets such as ideas. And if you don’t protect your ideas you could be extremely vulnerable. “If you don’t have ideas secured in rights, then you don’t have anything to sell and you don’t have anything for investors to invest in,” Paul told us.

He used the example of a FTSE 500 company attacking a smaller listed company’s IP and stopping its use of all brand rights and regulations. “It had some fantastic ideas and it had some great brands in the marketplace but the playground bully was able to challenge their rights and suddenly they lost the right to use that brand and immediately the value was lost.”

Protect your IP to win confidence from investors. Charlie explained that investors look for indicators like recurring revenue streams, client books, asset value and a strong product roadmap. Protecting your IP shows investors your concept or product has value.

Get your paperwork in order. Paul said that while many entrepreneurs are “crap at admin” it pays to take the time to set up your copyrights and IP paperwork professionally. This means that if your ideas are challenged, you’ll be in a good place to respond.

It also puts investors at ease: “Having rigour and discipline in your paperwork protects your rights,” Paul said. “And so when you come to IPO, or when you come to approach investors, they want to look at your back catalogue and they want to see where the roots are, where the foundations and value are. And they will scrutinise that relentlessly and the worst of them will try and chip you on price.”

Don’t wait around to protect what’s valuable. Although IP can be costly for a startup, Paul told us “you need to protect yourself as soon as possible”. He added: “Once you’ve created value, then you become prey to the playground bullies who want to steal your lunch.”

Paul recommends securing your IP, trademarks and domains within the first year and as soon as you have your brand identity. Paul said: “As soon as you create, as soon as you go to market with a brand, you’ve exposed the market to that brand and if somebody likes it they can nick it.”

As for patents, the process can take years and so Paul advises you at least start the process early with a small investment to put a stake in the ground.