Investors see more value in companies with patents

While the hit TV show Shark Tank is entertaining, entrepreneurs in Texas can also learn a lot by watching how the ‘sharks” talk about potential investments. Often, the issue of intellectual property plays a role in the sharks’ decisions about what businesses to invest in. Entrepreneurs who have thought about IP and done things to protect their IP seem to do better in the ‘tank.”

On one episode featuring a company called xCraft, the sharks were very concerned with protecting the company’s trade secrets. A founder of xCraft had invented two distinct types of drones that the sharks were very interested in. Before all five sharks agreed to invest in the company, Shark Robert Herjavec wanted to be sure that the designs couldn’t be copied. The inventor assured him that all of his company’s designs were protected with pending patents, and the company viewed licensing their technology as ‘silly.”

Protecting intellectual property is very important when there is a high risk of an idea being copied. If a business model, product or service has a low copy risk, investors may not view patents as crucial. For example, an idea that was pitched on Shark Tank called Rent Like A Champion had a low copy risk and little need for patents because the business model involved a lot of grassroots efforts that were not likely to be copied.

Securing patents for intellectual property can significantly increase a company’s value. A business and commercial law attorney may be able to help business owners to ensure that all of their processes, formulas and other trade secrets are legally protected.

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