Innovation and investment into intellectual properties is quickly becoming mainstream policy need for every country. While start-ups and investor funded companies have existed for long, investments into IP strategies are looking up as a new avenue for management of market risks.
Though financial advisors may suggest you a variety of means to help make an optimal judgement before investing ; but there are many questions that they fail to address due to novelty and complexity of IP investment opportunity.
Here are some questions every new investor should put on their agendas before they decide which IP strategy is worth funding.
Q1.How exhaustive are the IP portfolios of the company and what are the management processes?
As an investor you should know how serious is the company in fund allocation for each of its IP applications and what are the frequencies of innovations they plan to undertake. A company that is realistic about its ability to innovate will help you account for future values of those innovations.
If a company benchmarks its frequencies at a much higher rate, then the company is not serious about its IP innovations strategy.
Q2.What is the employed methodology for IP valuation?
In cases of IP financing, mergers, and acquisition transactions, knowing the valuation structure and methods that were employed are key to understand the extent of command those intangible assets can have over market prices as well as on your existing portfolio.
Q3. How is the company managing its innovations and what are their employee IPR training practices?
This question will tell you if the company has or plans to build internal innovations lifecycle management processes or aims to solely rely on traditional IP routes such as trademarks, or patents etc.
Additionally, this question seeks to determine if the new company aims to address aspects of revenue recovery in case of infringements and has adequate plans to incorporate IP due diligence, and forecasting practices. Some additional follow up questions you must enquire about are:
- How do you invest in training your employees about innovations and IP rights?
- Does your development and product team have adequate resources to avoid unintentional infringements or loss?
Q4. Does the company evaluate the freedom to operate risks before implementing new innovations or features in the market?
For companies with international offices, this question will help you know how extensive is the company’s go-to market plan for their innovations and if they have a contingency plan to manage their technology operatability.
Additionally, pricing structure for innovations is vital. As an investor you should know how will the company structure their licensing and innovations costs into their final market pricing.
Q5. How does the company operate its R&D ?
For an investor a major concern is that your portfolio should not hit the red. Hence, it is worthy to know how the company considers to operate its R&D in innovations. Do they have existing IPRs available for exchange or acquisitions from market-based sources. Or do they solely depend on in-house innovations?
Q6.How will the company monitor and manage IP infringements?
IP infringement management is a sole responsibility of the IP owner, and not public/government institutions. Hence as an investor you should know an IP strategy is secure, if the company has made adequate arrangements to monitor infringements risks from outside sources .
Q7.Has the company employed cyber security measures?
Every innovation requires constant upgrades and must allow its developers and employees to work upon the innovation using open-source platforms etc. However, as an investor it is key that company has trust building practices so there isn’t any internal breach of IP compliances that will pit your investment against a competitor. Hence, it is worthwhile to know if company secures its IP strategy and trade secrets with help of careful contracts and legal agreements, to maintain the sanctity of professional practices.
Intangible assets are the future of investment and is indeed promising. Yet, acknowledging the complexity is hallmark of a good investor. Asking the right questions are equally important as is seeking the right answers.
If you are a new investor or a new business who wants to have your IP strategy/ portfolio evaluated for valuation and due diligence then get in touch with our Strategy experts and we will assist you in taking the right call. One that will maximize your investment potential and also pivot you with the first-movers advantage.