3 misconceptions about IPR that cause investors to lose interest

Many investors consider the company’s intellectual property rights (IPR) an important part of the narrative when startups pitch their ideas. In this article, investor Sune Alstrup talks about which statements about IPR that makes him turn his thumb down when startups pitch to him.

Many startups do not pay much attention to protecting their ideas. But in a pitch session, that approach can backfire.

This is the opinion of investor Sune Alstrup, who in 2016 sold the company The Eye Tribe to Facebook (now Meta). Today, Sune Alstrup is an investor in 20 tech companies and four early stage investor funds. He is also part of the investor network DanBAN.

Sune Alstrup, investor & founder of the company The Eye Tribe

“A lot of startups have not thought about IPR because it is difficult to relate to. And that’s a huge mistake. Because if you don’t consider it, you will not exploit the full potential of your idea, and then there are not many investors who will invest in the project,” says Sune Alstrup and continues:

“There is a tendency for IP to be underestimated among startups. Therefore, a lot of mistakes are made and it hurts companies when they pitch to investors.”

Since Sune Alstrup started as an investor in 2017, he has seen countless companies that had not prepared for how they would present their intellectual property rights. Here he gives three typical statements that quench his desire to invest:

1. “IPR is not relevant for our startup”

I often hear this statement from companies that have not prepared to talk about their approach to IPR. Or just simply have no approach. This is a big mistake, because many investors can easily take apart that argument.

IPR is not just patents. It is also a matter of brands and designs, which may be relevant to most businesses. At the same time, it is always relevant to clarify the need for IPR. So unless the company has taken an active position and can argue why IPR is not relevant, the statement will make the founder appear unprofessional. It is very convenient for companies not to deal with difficult things like IPR, but companies I invest in must not cut corners.

2. “Software cannot be patented anyway”

Many people have the idea that software cannot be protected, but that is just a persistent myth. Software combined with hardware can easily be patented. For example, if your software is part of a sensor that measures temperatures or controls a car. Unfortunately, many companies choose to ignore this option and use it as a bad excuse for not including IPR into their business strategy. That approach is rarely worth investing in.

3. “We cannot let the patent process slow us down”

I only encounter this argument with companies that have not familiarized themselves with the possibilities of protecting their ideas. And yes, a long patent process can seem daunting when you just want to go full speed ahead. But the process is actually easier than you think. Just a handful of meetings with the right advisor may be enough, and it will likely save the company time and money in the long run. At the same time, it will increase the value of the company and attract more investors.

Learn more about IPR

Plougmann Vingtoft’s experts have extensive experience in advising companies in all industries on customs surveillance and protection against copyists. Contact us if we need to help you enforce your rights.