In late May, I presented on a crowdfunding panel at the Montreal Chapter of the Licensing Executive Society (LES). My contribution was around intellectual property (IP) and crowdfunding, lessons learned from two Arizona based campaigns, and top three tips for fundraising. We will discuss these topics in four blog posts. As always, the slides are available on slideshare here.
Traklight’s fundraising approach – how to raise money with the maximum valuation and minimum of business risk – has been around for several years. Our five steps to safe crowdfunding:
- Identify IP
- Protect IP
- Pick a Platform
- Build Social Capital
- Create a Pitch
Why Identify and Protect First?
Every company or product has IP. And when you go to the public to raise money and present how your product works or disclose the clever name of your new product without protection, you are risking your IP. If you have the potential to patent your product, you can adversely impact your ability to patent in the US and abroad when you discuss it publicly.
IP is often the most valuable of all your business assets, and if you have secrets as part of that IP portfolio, those need to remain secret. A campaign that raises money but results in loss of your name, design, or patent rights, is not a success. Read more about how the TikTok Lunatik watch raised almost a million dollars but was widely copied during the campaign because no copyright, trademark, or design patents were filed prior to launch. In the same Forbes article we discuss Aurora Labs' wise decision to pull their Kickstarter campaign because they were being asked to risk their IP by disclosing precisely how their 3D printer functioned online.
Because you cannot protect what you do not know you have, all potential IP needs to be identified and protected well before you launch your campaign.
A Word on Domain Names
One of the most common mistakes made earlier on is to think that securing a domain name will allow the use of that same name as a product or company name. Stephane Rainville, a panelist in Montreal, talked about how he had been instructed to spend $250K to purchase a domain name. Luckily an attorney intervened before the money was wasted because he discovered that the trademark rights for the domain name were already taken. A domain is only a domain name, there is no right to use the name in commerce and in some cases you may infringe on others’ rights by using the domain name on a website.
Timing is everything and June 19th marks the first day that Reg A+ can be used. In next Wednesday’s blog we will discuss picking a platform and the impact of Reg A+ on the crowdfunding space.
Traklight’s free Business Risk Assessment identifies issues for crowdfunding and fundraising.