Patents, trade marks and startup finance

This study examines the role of intellectual property (IP) rights – specifically patents and trade marks – in facilitating access to finance for European start-ups. To this end, it assesses the links between the filing of IPRs by start-up firms and their success in raising venture capital (VC), as well as the signalling power of patents and trade marks as predictors of successful exit strategies for investors.

Main findings

• On average, 29% of European starts-ups have filed registered IP rights, with important differences between industry sectors.
• Biotechnology is by far the most IP-intensive sector, with nearly half of start-ups using patents or trade marks.
• Start-ups increasingly make use of IP rights as they grow, with a strong focus on European IP rights at all growth stages.
• The fiing of patents and trade marks at the seed or early growth stage is associated with a higher likelihood of subsequent VC funding. This effect is particularly important at the early stage, with a 4.3 times higher likelihood of funding for start-ups that filed trade marks, and a 6.4 times higher likelihood of funding for start-ups that filed patents. Start-ups that filed both trade marks and patents show the highest likelihood of funding at both the seed and early stages.
• The filing of European patents and trade marks is associated with an even higher likelihood of subsequent VC funding for start-ups.
• The filing of patents and/or trade marks is associated with a more than twice higher likelihood of successful exit for investors. The highest likelihood of Initial Public Offering (IPO) or acquisition is observed for start-ups that filed both patents and trade marks.

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