EU study shows
Startups with IP are more
The European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) have published a 61-page document study showing that European startups that guarantee intellectual property (IP) rights protection are 10.2 times more likely to obtain seed funding than those that do not.
The startup ecosystem in Europe has exploded in recent years, with venture capital (VC) deals reaching €110.8 billion in 2021, up from €9.4 billion in 2013. This is believed to be due to both to a more mature European venture capital industry and increasing growth. the interest of non-European investors.
(In comparison, Venture capital investment in the United States was $59 billion in 2013 and $345 billion in 2021.)
Intellectual property rights in the EU are similar to those in the United States, with some variations. Some topics are covered by EU law, while other areas are covered by individual states’ intellectual property laws.
As we noted in this Blog In June, the EU recently launched a unitary patent system that allows patent applicants to apply for a single patent that will be valid in all European countries that have so far joined the system.
European intellectual property law covers:
- Appellations of origin and Geographical Indication (such as geographical (e.g. Champagne, Porto or Bordeaux) or non-geographical (e.g. Feta or Basmati) names associated with certain products)
- Design rights (similar to U.S. design patents)
According to EPO,
On average, 29% of European start-ups have filed intellectual property rightswith significant differences depending on the industrial sector. Biotechnology is by far the most intellectual property intensive sector, with almost half of start-ups using patents or registered trademarks. Other IP-intensive sectors include science and engineering (with 25% of patent users and 38% of trademark users), healthcare (20% of patent users and 40% of trademark users). of trademarks) and the manufacturing industry (20% of patent users and 36% of trademark users). brand users).
According to the study,
Filing patent and trademark applications at the seed stage or early growth is associated with a higher likelihood of subsequent venture capital financing. This effect is particularly strong at the early stage, with a 4.3 times higher probability of funding for startups that have filed trademarks, and a 6.4 times higher likelihood of funding for startups that have filed patents. Startups that have registered both trademarks and patents have the highest chance of securing funding, both at the seed and early stages.
According to João Negrãoexecutive director of the EUIPO,
Intangible assets today represent the vast majority of a company’s value, and formal intellectual property rights, such as trademarks, not only provide legal safeguards for investments in intangible assets, but are also the key to securing funding and collaborations. This is particularly important for newly established innovative companies, which typically have few early-stage assets aside from their intellectual capital. Today’s study shows that 27% of the start-ups analyzed had filed for a trademark, more than any other intellectual property right.
Other findings from the study include:
- Owning intellectual property rights strengthens startups’ ability to raise funds, especially for high-tech industries with higher capital requirements.
- The biotechnology sector leads in the use of patents and trademarks, with almost half of the sector’s startups seeking these essential rights
- More and more startups in Austria, Switzerland, the Czech Republic, Germany, Finland, France or Italy tend to file patent and trademark applications.
Interesting for investors, the study reveals that:
Filing patent and/or trademark applications is associated with more than twice the likelihood of a successful exit for investors. The highest probability of initial public offering (IPO) or acquisition is observed for startups that have filed both patents and trademarks. A higher probability is also observed for startups that have filed applications for European intellectual property rights than for those that only use rights at the national level.
The EPO introduces a Deep Technology Researcherallowing “potential investors to identify and evaluate startups with pioneering and promising new technologies”.
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