Venture Capitalists’, Do You Know All Patents Start Life As Intangible Assets!

Michael D. Moberly    July 8, 2008

Investing in research-based start-ups, early stage companies, or an R&D project is fundamentally about the intangible assets which are, or, will be in play!

All innovation, essentially starts life as intangible assets…in the form of proprietary know how, trade secrets or, more specifically, as intellectual, structural, and relationship capital.

Anytime those key intangible assets are treated in a cavalier manner…and neglecting good trade secret – proprietary information protection practices, today, this borders on fiduciary irresponsibility!

In highly compressed R&D environments, ideas and innovation (research, science, etc.) can mature very rapidly…and, if effective stewardship, oversight, and management (of each asset) is not practiced effectively and consistently, the value, potential  revenues, and competitive advantages of those assets can easily meld into open (public domain) sources through neglect or illegal/unethical acts.  And, once there, all protections are undermined, and worse, asset value will, very likely, be significantly reduced, if not go to zero!

Too, it’s prudent to recognize…there is a growing probability, perhaps inevitability, that most cutting edge innovation is – will be the subject-target of broad (global) competitor-business intelligence and data mining initiatives.

  • One consequence of which is that a portion of the value and potential market, if commercialized, may already be substantially diluted (weakened), which I refer to as ‘silent hemorrhaging’.

Solutions and strategies to mitigate such vulnerabilities – probabilities…include consistent stewardship, oversight, and management of the innovation which there is an obligation to provide to investors and IP holders alike.  And, it must be more than mere snap-shot-in-time reference points, instead it should consist of…

1. Peeling back overconfident and/or naïve representations about the sufficiency of the safeguards and practices with respect to sustaining (preserving) control, ownership, and value of the innovation.

2. Assessing the extent to which innovation may have already been diluted relative to being able to fully exploit (commercialize, maximize, extract) its projected value.

3. Scrutinizing the intellectual – structural capital underlying the innovation by examining its origins (historically, sequentially) from ‘idea-concept through its current stage of development’.

4. Assessing ‘attractivity and demand’ factors for key – at risk aspects of the innovation from a competitor-business intelligence and data mining perspective.

Again, all patents (intellectual properties) whether provisional or issued, start life as some manner of proprietary know how, i.e., intellectual, structural capital, in which effective stewardship, oversight, and management are not only warranted, but essential!

Michael D. Moberly [email protected]  St. Louis  ‘Business Intangible Asset Blog’ since May 2006, 600+ published blog posts ‘where one’s attention span, business intangible asset challenges, and solutions converge’!


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