Improve Venture Capital comes with IP Portfolio Management

For all the splendor and fascination around the venture capital industry would be the returns on investments in VC funds will significantly increase, compared to other forms of investment more generally accessible. However, suggests that the research has been the industry over time, returns to venture capital approximately equal to the stock market in general. Fail In fact, over half of all venture capital-backed companies and about the same 50% of all money invested in venture capital fundslost. This article describes how to help a comprehensive IP strategy to reduce the risks of VC companies and increase the yield in the Fund could.

After a few conversations I have with people in the VC industry had to do, do not say the statistics, the full picture. In addition to the half-funded with venture capital firms that fail, there are those that are considered the "living dead" - companies, either withdraw from the business, still offer significant returns are describedare needed to meet typical VC model. One panelist suggested I looked at a venture conference last year that their financial model to make sense, they require at least 1 of 10 companies to create a 20-return on their investment. This could be particularly worrisome for the industry, given the emerging trend towards fewer and lower value of liquidity events.

But what if a venture fund additional investment, there could extract from its portfolio companies, not including theCompanies and from the so-called walking-dead company? I believe that a comprehensive cross-IP portfolio management strategy could risk higher income investors.

IP due diligence to Lower Business Risk

VC's typically invest in companies in the early stages of their life cycles. At the point of making the investment decision, the venture capitalists placing his bets on the business idea, the management team, and whether they knowor not, they are also placed its bet on the IP, which is the underlying business.

It is important that VC firms lead proper and due diligence to support their investment decisions. Sorry, but simply a list of patents and applications is not enough. Investors need to understand whether the patents are strong patents, with adequate coverage for the economy and the technology in question. The following quote brings it to the better than I:

"EspeciallyYou invest in a new business idea for a new project, why would you want to know whether your business idea in the long term, or whether you have a minimal ability to be able freely in relation to their own business idea innovative? Or why you should not want to know whether another company $ 100K or more patents alone in the new business idea that you have invested to investigate? "- From IP assets maximizer.

This all-important question should be answered during the client, byDiligence. Be warned, however, also said that patent landscape topographic maps or other abstract visualization is not a sufficient degree of analysis. It may be (an improvement over a simple list, even though some might argue that point involved), but a detailed analysis must include a detailed examination of claims in the context of the company and the technology in question.

IP portfolio management to lower costs and increase the margins

Although the majority of the portfolioCompanies which are funded from a specific venture funds is relatively small and have a relatively small portfolio of patents that may be worth it for the VC to look over the entire IP portfolio in a summary.

I did a quick analysis of a few regional VC firms - with a relatively small portfolio of companies, these companies had invested an interest in more than 300 patents and 600. With the corporate standards, these substantial portfolios. I would expect to see even greater portfolio of major projectsCompanies.

In companies with portfolios of this magnitude, it is important to understand the portfolio in several dimensions. For example, want to know IP professionals, marketing specialists and entrepreneurs, which IP assets to support the products. Understanding these relationships allows a company to block competitors, reduce costs, increase margins and ultimately increase returns for investors. In addition, they want their patent portfolio of markets and technological fields, they serve to categorize asit helps them to understand where to focus their patents align with the business.

Bringing this discipline to IP portfolio management has the added advantage of revealing that patents are not the core business of the company. With this knowledge in hand, looking for a typical company to cut costs by patents expire, or they can try to sell or out-license their patents are not the core business and thus creating a new revenue source.

IP licensing and increase costs

Patentsnot have to have the core business of the company, can still be valuable to other companies and other industries. There are some common examples of companies who come have been able to generate significant revenues from the non-core patents through an active licensing programs - companies like IBM and Qualcomm to mind. However, there are a number of other companies which have significant returns by monetizing their non-core IP assets have generated.

In the case of a VC portfolioCompanies, so each company can be only a small number of non-core patents. However, the entire portfolio of companies, the venture capital firm may have the rights to a significant number of patents that may be useful to other businesses / industries.

We can not expand the concept of monetizing its non-core assets of the top companies in the venture portfolio to the "Walking Dead" and the existing portfolio companies (albeit with the latter two groups, we can worry less about the distinction between core --and non-core patents). In many cases, the business model and the due diligence to support the initial investment in these were probably sound, but the company failed in the execution or market-timing problems. In many cases, the underlying IP assets can still fully valid, valuable, and for entry into a focused licensing and marketing program.

A multi-million dollar license revenues were well complement the regular events are market liquidity in the VC.

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