A few years ago, I was advising a company based on a technology discovered by a professor at our local university.
The professor got everyone around him excited by the technology and immediately started raising money and building an organization around it–without telling anyone he had no real rights to the intellectual property. It was his, but it wasn’t. He had discovered it while an employee, and didn’t realize that made it the property of the university.
One day, the company vanished, and all the employees with it. The university had swooped in to claim its IP. We all lost money on that one.
Intellectual property is one of the most misunderstood and neglected issues of entrepreneurship. Most founders don’t know much about protecting their IP, can’t really afford a special IP lawyer, and wouldn’t know a good one anyway.
That sucks, because when they start to raise money, it’s one of the first things investors care about. They are much more likely to feel comfortable investing if the startup team has intellectual property that can be protected, because even if the company fails the IP might still be worth something on the market. In fact there are services that do nothing but buy and sell the intellectual property of failed companies.
In this market, VCs are getting hammered about company valuations, and the valuation relies on identifying the IP, making sure that the IP is usable and that it is owned by the company. If all that is in place, the valuation is likely to be higher.
Bottom line: Entrepreneurs and small businesses need to routinely identify and protect IP in order to leverage it either for market advantage or for funding. A recent article about the top 65 questions VCs ask included four questions on IP. Likely four is not enough, because when a company has little or no revenue, its intellectual property can be almost half of its value.
Enter Traklight, started by Mary Juetten, an attorney who saw that it was too expensive for many young companies to have a traditional in-person IP audit and decided to do something about it. Traklight is both streamlining the IP audit process using proprietary software and collaborating with other companies to offer automated solutions at an affordable price.
These tools not only help inventors and entrepreneurs, they help investors as well.
In some ways, Traklight’s tools are disruptive for the legal industry, because of its automated intake process, triage, and software-enabled IP audits. But forward-thinking lawyers who know what’s changing are using the tools themselves as a workflow solution that helps them retain business they would otherwise lose.
For attorneys, they are an alternative to expensive clunky data rooms that provide secure storage for the IP of all clients.
Traklight also uses experts to deliver what Juetten calls outsourced innovation management services to create a routine for identifying and discovering protectable IP in an organization, train all employees in how to handle it, and put together policies and best practices.
With Traklight’s tools, it is now possible for companies to be ready to fundraise immediately with some of the most important i’s dotted and t’s crossed.
[Image: Oliver Sved on Shutterstock]