6 Ways to demonstrate the value of your trademark portfolio to an investor
If ever there is a business area with an additional revenue stream written all over it, it would be the process of extracting value from a trademark portfolio.
Most companies are unaware of their trademark and other IP portfolios' enormous investable value. For example, establishing your market authority — commonly known as defensibility or moat in the equity investment community, outflanking competitors for market share, and increasing revenues and business valuation — is the ultimate music to any investor's ears.
In its basic form trademark portfolio is a collective expression of innovative or creative ideas that are currently or projected to deliver value to a group of customers. These expressions could be in words, graphics, smells or sounds. The missing piece when it comes to demonstrating the value of a trademark portfolio to investors seems to be the lack of commercial caveats or the articulation of commercial caveats where a given trademark or a portfolio of trademarks is the main value driver when it comes to maximising the business's profitability.
When I have listened to companies explain their innovation value chain or value proposition — many of them only seem to focus on baseline revenue. Rarely do I see a business owner or a company executive who sees beyond the surface — that foregone conclusion of one or two revenue streams. Having a portfolio of a trademark and the foresight to tap into its commercial viability is supposed to do exactly that — it will help you identify multiple ways to increase revenue from an already established profit system.
Now it is important to know that the term “ commercialisation “ is very subjective because there isn’t a single or universally accepted definition for it. It is simply down to the many “conversion mechanisms” of value to profit you have adopted within your business strategy or business model. A thoughtfully created trademark portfolio converts commercial activity to profit in both near-term and long-term returns.
In the near term, the emphasis should be on increasing the revenue while reducing the cost of maintaining the portfolio. An example is when a company reinforces its trademark(s) to the public without a new line of products or a new service offering. The company is simply commercialising its trademark as a marketing tool or a new way of advertising an existing product or service (whether or not they know it). A trademark portfolio can also target adjacent markets and establish a strategic partnership with otherwise unreachable players. In the long-term, the emphasis is to create an innovative idea and develop other intangible assets, e.g. a patent, business methods, a new product line, or an extensive service targeting new verticals captured under single or multiple forms of intellectual property rights.
The following six key steps will help you drive a strong profit system with your trademark portfolio and stimulate an investor’s interest in your company.
- Demonstrate the opportunities available to increase income from current trademarks in the portfolio.
- Show that the cost of creating and maintaining a new trademark is lower than the ROI they bring.
- Outline how your business protects and monitors the key trademarks in its portfolio.
- Show that you have a holistic approach to IP management; this may include a patent strategy.
- Show that you have market-product future-proof opportunities (transient competitive strategy)
- OKR metrics indicate when a competitor is encroaching on the company’s trademark strategies