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The Importance Of IP To The Fast Growing Business Sector


05/08/2011

By Fuchsia Curry, AngelNews

During Spring 2011 AngelNews, with the support of MunichRe, undertook a research project into the views and perceptions of 154 early stage investors, entrepreneurs and advisers in the area of IP protection, and spoke to 14 VC Fund Managers. The aim was to understand the importance these groups placed on IP in the fast growing businesses with which they are involved, and also their opinion on IP insurance and what constitutes a “good” policy.

How important is IP?

Clearly, IP is very important for both investors and entrepreneurs, with 64% of investors stating that over half of their IP...

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...rich investments are “totally dependent” on their IP for success. The worth of IP is measured more in terms of what it enables the company to do, as opposed to an intrinsic monetary value.
When asked to place a value on IP as a percentage of the total value of the business, versus a monetary value – investors, at early stage, stated 25%, with a value of less than £2m – with both figures increasing in line with growth of the company. Entrepreneurs, putting a slightly higher monetary value on IP, agreed it would increase with company growth.

Both groups see the benefit in holding IP for a long period of time, with 44% of entrepreneurs believing after 5 years they could command a premium of between 25% and 100% over their competitors.

Interestingly the VC’s implied the primary reason for infringement challenges was as a tactical move from a third party to initiate a deal, be it commercial, i.e. a licensing agreement, or to generate a trade sale/acquisition.

The threat of attack is very prominent, with 46% of investors saying 26-50% of their investees had faced serious threats. Notably, they also expressed doubt in... continued on page two >

 

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