How do we get around the chicken-egg problem of having to invest money to protect IP in order to secure investments from VCs?

Question

Hi! As a startup looking for funding, we are often told that solid Intellectual Property protection of our product is essential to secure an investor's interest. On the other hand, protecting your IP requires some finances (Patent application in the U.S.: approximately $30.000?), so it would seem that at least seed capital has to come first.

Is this really a classic chicken-egg problem, or are there maybe other strategies to manage IP protection on the one side and presenting investors with a strong product on the other?

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Answers: 2 public & 1 private

Ae76fc59ec
Lawyer

Hi there! It is definitely true that IP protection will help to attract investors ; a pending patent application (if possible) is sufficient. However, if this would be too expensive, and you wish to already obtain seed funding on the basis of your still unprotected idea, consider (i) a standard confidentiality agreement with candidate investors, and (ii) establishing proof of your invention as well as the date thereof. As for the second aspect, each country will have own procedures fit for such purposes. In this respect, do not rely upon the often tried and always failed approach of sending a letter to yourself. Hope this helps. Best regards, Kirian

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