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.

1. Demonstrate the opportunities available to increase income from current trademarks in the portfolio.
2. Show that the cost of creating and maintaining a new trademark is lower than the ROI they bring.
3. Outline how your business protects and monitors the key trademarks in its portfolio.
4. Show that you have a holistic approach to IP management; this may include a patent strategy.
5. Show that you have market-product future-proof opportunities (transient competitive strategy)
6. OKR metrics indicate when a competitor is encroaching on the company’s trademark strategies