22, April 2022
Why you need to secure comprehensive trademark protection before a funding round
There are several reasons why you want control over your intellectual property rights, such as trademarks, before a funding round. Not least because intellectual property rights can account for a significant part of a company's value. As much as 80% to be more precise. 80% of the value, and so many companies that don’t take care of them. Are you on the hunt for capital funding? Then you need to be aware that investors will examine both how you take care of your intellectual property and also how you protect them.
That’s why, in this blog post, we will take a closer look at why it is important to secure your trademarks before raising capital. We will also look more closely at an investor’s concerns, and how you can prepare for an investment round.
Why is trademark protection important to investors?
We have already mentioned the potential value of your trademarks. The fact that investors care about trademark protection tells its own story. They, of course, want to minimize their risks which is why they demand comprehensive trademark protection.
In addition to minimizing risks, there is another important factor that is of value to investors. And that's the future return. This is an area where brand protection is vital as it lays the foundation for how your company can scale. Investors want a guarantee that the business can maintain growth under the established name, without unnecessary and expensive legal hurdles further down the line.
It's can be easy to forget that trademark protection gives you exclusive rights to use your trademarks. So it’s a legal right to use, for example, a company name, logo, or domain name. If you don’t have comprehensive trademark protection in a market where you want to expand, it may be the case that you are not allowed to use your trademarks there. And investors don't like you to have to go through a rebranding while you grow.
What are investors worried about?
Investors want to feel secure. In short, not keeping track of your trademarks means uncertainty that can lead to major problems and high costs. For example, you open it up for someone else to produce pirated products, mirror a website, or misspell a domain name.
If you encounter this kind of problem then your brand is in great danger – and investors are fully aware of this. You risk not only reduced revenue but also losing the credibility you have built up around the brand.
How can you prepare for an investment round?
When it comes to trademark protection, it's about staying ahead of the game. It is important that you have a clear brand strategy and that you can prove to the investors that you have secured your trademarks according to plan.
Determining factors for how your brand strategy is designed include:
- How well known is your brand?
- What is the competition like?
- What does your production chain look like?
- How great are the risks of infringement in the form of pirated copies and the like?
- What is the potential damage of an infringement?
- Are similar brands already active in your markets?
- What is your long-term plan? Please take into account any expansion plans as early as possible.
We have also pointed out that trademark protection should be comprehensive. This involves having the following three elements in place:
- Legal protection
- Digital protection
- Technical protection
How protected is your brand? Free brand check!
After reading this blog post, you may feel unsure about how well protected your brand actually is. You may have registered the trademark, but is it adequately protected against infringement?
At Abion we offer a free brand check so you can find out about:
- Breaches in your trademark protection
- Potential threats
- Tips on action you can take to protect your brand
Get outside help
As you can see, there is a lot to keep track of when it comes to trademark protection if you want to convince potential investors. So as early as possible, and before applying for funding, bring in a trademark protection consultant who can help you set up a relevant strategy.
- Intellectual property can account for up to 80% of a company’s value. Investors will therefore examine how you take care of, and protect them.
- Investors want a guarantee that the business can maintain growth under the established name.
- You must be able to prove to the investors that you have secured your trademarks in all markets where your business is heading.
Do you want to know more about how to secure your brand before a capital round?
Contact us and we will help you!