How Critical Is A Patent To Getting Investors?

Caldwell Video Series – Part II

The second segment in our informational video series once again features a panel of four Caldwell clients at an MIT Enterprise Forum discussing whether or not having patents was a key factor, or “value driver”, in the growth or acquisition of their respective companies.

Joining Keegan are the following Caldwell clients:

Tom O’Leary, Team Member at BETA Technologies

Jay Jacobs, Founder of RAPID and co-Founder of paperlessPARTS,

Karl Ruping, Managing Partner at incTANK Ventures

Cyrus Schenck, CEO & Founder of RENOUN

(Transcript for panel discussion below)


Let’s move on to another line of questioning. I want to direct this towards Jay and Karl, but, you know, feel free Tom or Cyrus, to hop in, as you want. You know, Jay and Karl, everyone’s always looking, every entrepreneur, in my opinion, you know, we should be looking down the road at, you know, what is our exit strategy, you know, as we’re leaving the gate, what is the plan here?

And so, maybe, each of you could speak to the role that IP, has played in exit strategies that you’ve been part of and in anything else with regard to that.


Yeah, I’ll take the first, kind of more general, and maybe you (Jay) could take the more detailed because you have direct experience. I wouldn’t say it’s critical in the exit, there are so many elements to an exit right, but, it is a value driver, for sure. Because there are so many things you have to do to survive, nevermind succeed, and then, success is not necessarily an exit, right. It could be a viable business and that is it. But to exit, either by M&A, or, god help us an IPO, there are many moving parts.

But, I think having, again, I go back to an early strategy having that early strategy so that you can raise enough money at the right valuations, so that you can get to the exit, and actually have equity as the entrepreneur, at the end of the day, these are critical elements that I think are very important, when it comes to IP to drive the value even before you get to an exit because as entrepreneurs we have to protect our equity, and even I, as an early-stage investor, I mean, I’m up here, in part, because I’m on the same side of the desk, quite often, because my money goes in so early that I have to think about dilution, I have to think about are we trying to raise another 10 million, or is it going to take a hundred million to get to that exit? So, yes, important at the exit point. But, I think critical is getting there.


I think for us, when the acquirer found out that we had IP in process, that we had a strategy, that gave us some credibility, early on, we also were doing the same thing as them, but differently, and they had patents that had been granted in the space. We were aware of them, we knew that we were not violating them, and it gave us a lot more confidence that we had already had IP filed to “open the kimono” a little more, to them, reveal. They were real cautious, they did not want specifics. But, in the conversations there would have been enough information they could have gleaned a sense of what we were doing. I was totally comfortable with those conversations because of the backstop of IP filing that we had and they did hire an independent entity to evaluate us versus what they had to ensure that there was no overlap, or, minimal overlap, and that came back true. So, they were more confident in their buying of our technology because of the documentation that we had. Otherwise, it would have been really hard to document our process, but it was there in the IP.

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