Industrial Property, Patents, Trademarks and Start-up Financing
A new study finds that start-ups that own patents and trademarks are 10 times more successful in raising funding.
Ownership of intellectual property (IP) rights improves start-ups’ ability to raise funds, particularly for deep tech sectors with higher capital needs.
The biotechnology sector leads the way in the use of patents and trademarks, with almost half of the sector’s start-ups aiming to obtain these essential rights.
The highest numbers of start-ups submitting patent and trademark applications are recorded in Austria, Switzerland, the Czech Republic, Germany, Finland, France and Italy.
Munich, 17 October 2023 – The European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) today published a new joint study that highlights how patents and trademarks can strengthen the success of European start-ups.
The study indicates that, on average, start-ups that own these two types of intellectual property (IP) rights during their seed or early growth stages are up to 10.2 times more likely to be successful in obtaining funding .
On average, 29% of European start-ups have registered IP rights, with significant differences between sectors.
Biotechnology is by far the most IP-intensive sector, given that almost half of the start-ups operating in it rely on patents or registered trademarks.
Other IP-intensive sectors include science and engineering (with 25% patent users and 38% trademark users), healthcare (20% patent users and 40% trademark users), and manufacturing (20% of patent users and 36% of trademark users).
Ownership of European patents and trademarks is associated with an even higher advantage, with an early-stage financing rate five times higher than that of national IP rights (the probability is 6.1 times higher for trademarks and 5.3 times for patents).
So-called “deep tech” start-ups face particular challenges in developing innovative technologies because they require significant investments and long implementation times. These start-ups can particularly benefit from patents and trademarks to attract ‘patient’ investors.
The President of the European Patent Office said: «Start-ups are dynamic catalysts for innovation and economic growth. They have the potential to develop new solutions that address society’s most pressing challenges and achieve a more sustainable future.
We must therefore find ways to support our start-ups more. This year the EPO has made considerable progress with the introduction of the unitary patent, but now our new Patent and Technology Observatory will introduce an innovative tool, the EPO Deep Tech Finder which will allow potential investors to identify and evaluate start-ups with pioneering and promising new technologies. Let’s connect creative innovators with those who have the resources to fuel the innovation engine: it can be a win-win.”
The Executive Director of the European Union Intellectual Property Office said: «Intangible assets today represent the vast majority of a company’s value and formal intellectual property rights, such as trademarks, are not only legal guarantees for investments in intangible assets, but also the key to securing financing and collaborations.
This is particularly important for newly established innovative businesses, which typically have few early-stage assets apart from their intellectual capital.
The study published today shows that 27% of the start-ups surveyed had submitted more trademark applications than any other IP right.
This is why the support we can provide them is so important, not only to take the first step and register their IP right (and to this end the European Commission’s SME Fund, implemented by the EUIPO together with IP offices national and regional ones, is very useful), but also in the later stages with initiatives such as IP assessment and pre-diagnosis service related to the enforcement of IP rights.
However, we see that Europe lags behind other regions of the world when it comes to start-up financing and we need to step up efforts to strengthen IP as a tool for access to finance, growth and sustainable development for EU businesses, in particular for SMEs, so that our innovative start-ups can thrive.”
IP ownership between different countries
There is significant variation in the use of IP rights between European countries.
Finland and France have the highest percentage of start-ups with an IP filing of 42%.
Start-ups established in Germany (40 %), Austria (40 %), Italy (39 %), Norway (37 %), Sweden (34 %), Denmark (34 %), Switzerland (32 %) and the Czech Republic (31 %) have on average a higher number of IP rights applications.
Companies from these countries are also the most likely to file trademark and patent applications and to bundle the two IP rights. This applies in particular to start-ups established in Austria, Switzerland, France and the Nordic countries.
IP ownership across industries
In terms of sectors, biotechnology sees the most intensive use of both patents and trademarks: almost half of European biotechnology start-ups submit applications for one or both IP rights.
48% of biotech startups have filed a patent application and 47% have filed a trademark application.
This is the sector with the highest percentage of start-ups holding both a patent and a trademark (31%).
The sector with the second highest percentage of start-ups holding IP rights is science and engineering (47%), with 38% of companies having submitted a trademark application and 25% having filed a patent. The results are similar in healthcare and manufacturing, with 40% of companies in each sector having registered a patent or trademark.
While all products and services can be trademarked and such trademarks can be protected by registration, there are many industries, particularly in services, whose innovations are not patentable.
Other sectors with intensive use of patents, after those mentioned above, include media and entertainment (21 %), information technology (20 %), energy (19 %), natural resources (18 %) and sustainability (17 %).
When it comes to brands, other sectors with high usage intensity are sustainability (37%), energy (36%), artificial intelligence (36%), agriculture and livestock (36%) and natural resources (35%).
Support the modern economy
The start-up ecosystem has seen exponential growth in Europe in recent years. According to the 2023 OECD Indicator Framework on the Financing of SMEs and Entrepreneurs, all economies have seen a significant increase in venture capital activity following the COVID-19 crisis, with a median increase of 58.6%. in 2021 (compared to a growth of 4.18% recorded in 2020).
However, national venture capital associations reported in the same report that the increase in the amount of venture capital investments was particularly significant in later stage and established businesses, but less marked in seed and early stages.
Indeed, a draft report from the European Parliament’s Committee on Industry, Research and Energy, published in September 2023, highlighted that access to capital remains a significant barrier for start-ups and scale-ups. up.
Many struggle to raise early-stage investments, particularly venture capital, which is critical to growing their operations, developing products and entering new markets. Various EU initiatives have already been launched to address these challenges, including the creation of the European Innovation Council (EIC) as a one-stop shop to identify, develop and scale up emerging deep tech technologies and breakthrough innovations.
In the complex landscape of start-up companies, patents and trademarks emerge as essential tools for competitiveness.
Patents give these emerging companies a fundamental right: the power to prevent others from appropriating their pioneering technologies. This not only safeguards their advantage in terms of innovation, but also pushes them into a strategic position within the market.
Trademarks serve as a legal bulwark, strengthening investments in intangible assets.
Such distinctive symbols or names, if legally protected, become an effective shield that protects a start-up’s brand identity from infringement.
Source European Union Intellectual Property Office (EUIPO)
