Leveraging IP to Raise Funding and Improve Your Valuations in a Bear Market by John Cronin, CEO ipCapital Group, Inc. . April 15th , 2001 Leveraging IP to Raise Funding and Improve Your Valuations in a Bear Market by John Cronin, CEO ipCapital Group, Inc. . April 15th , 2001 © 2001, ipCapital Group, Inc. All Rights Reserved. 2 www.ipcapitalgroup.com Agenda Agenda Today’s Environment Challenges Lets discuss IP and leveraging Protected Innovation SM Case Studies Actions Your Can Take © 2001, ipCapital Group, Inc. All Rights Reserved. 3 www.ipcapitalgroup.com Today’s Environment Today’s Environment © 2001, ipCapital Group, Inc. All Rights Reserved. 4 www.ipcapitalgroup.com End of the Bull Market End of the Bull Market Nasdaq Composite Index, 1974 - date Nasdaq Composite Index, 1974 - date © 2001, ipCapital Group, Inc. All Rights Reserved. 5 www.ipcapitalgroup.com VC Funding is Dropping VC Funding is Dropping PWC MoneyTree™, February 6, 2001 © 2001, ipCapital Group, Inc. All Rights Reserved. 6 www.ipcapitalgroup.com Internet Investors are Shying Away Internet Investors are Shying Away $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 Dollars in Million s Q1 96 Q2 96 Q3 96 Q4 96 Q1 97 Q2 97 Q3 97 Q4 97 Q1 98 Q2 98 Q3 98 Q4 98 Q1 99 Q2 99 Q3 99 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00 Internet-Related Venture Capital Investments 1996 - 2000 PWC MoneyTree™, February 6, 2001 © 2001, ipCapital Group, Inc. All Rights Reserved. 7 www.ipcapitalgroup.com New Expectations are Emerging New Expectations are Emerging "We are moving into the stage of the cycle when growth is strong, inflationary pressures build up and interest rates rise. Investors prefer the security of profits today to the promise of profits in the future." Owain Evans, global strategist at Merrill Lynch © 2001, ipCapital Group, Inc. All Rights Reserved. 8 www.ipcapitalgroup.com Knowledge will Drive Future Economic Growth Knowledge will Drive Future Economic Growth “Intellectual property rights is an area of law and business management which is enjoying a recent explosion in significance. Many governments and businesses believe that knowledge will increasingly drive economic performance in the industrialized countries.” Ruth Soetendorp, Director, Centre for Intellectual Property Policy and Management, Bournemouth University © 2001, ipCapital Group, Inc. All Rights Reserved. 9 www.ipcapitalgroup.com VCs are Recognizing the Value of IP VCs are Recognizing the Value of IP “The venture capital arena is quite savvy to the importance of an intellectual property portfolio.” Lance D. Reich, partner Bockhop & Reich, LLP © 2001, ipCapital Group, Inc. All Rights Reserved. 10 www.ipcapitalgroup.com IP is Becoming a Strategic Issue IP is Becoming a Strategic Issue “Intellectual property management has become a new corporate strategy issue. A patent strategy can help Wall Street see a company’s true competitive prospects and earnings potential.” Kevin G. Rivette & David Kline, authors Rembrandts in the Attic [...]...Companies are Taking Action to Manage Their IP “The new economy barters, trades, and produces one integral asset more than any other: intellectual property Today, nothing is more valuable than an individual's ideas And companies are taking steps to capture and preserve any and all innovation born within them.” Gregory J Pleshaw – Fast Company © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com... Processes Databases Databases Drawings Drawings Designs Designs Leveraging Human Capital Leveraging Human Capital Tools to Direct the Inventive Tools to Direct the Inventive Mind Mind Tools and Services to Tools and Services to Create The Value Create The Value © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 15 Intellectual Property Patents Enabled Publications Copyrights Trademarks... Trade secrets Challenges of the New Economy Time is your enemy in Loss of Human and Intellectual Capital Processing your Innovations Realization of Asset Potential Conversion of Assets to Capital Intellectual Property is CapitalSM The market for a solution is huge – every company of significance today is concerned about the loss of human capital and the management of intellectual assets © 2001, ipCapital... 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 16 Challenges of the New Economy Alignment of Functions Needed in Business Business Business IP Legal Market G A Inventors P Most Companies © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com Business Market IP Legal G A Inventors P Aligned Companies 17 Market IP Legal Inventors New Economy Companies Challenges of... Economy Alignment of Strategies, IP Should Lead Business ss ne si Bu IP Most Companies © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com s es in us B IP Aligned Companies 18 IP ss ne si Bu New Economy Companies Let’s Discuss IP and Leveraging © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 19 What is IP? Key Hidden Rights Trade Secrets – Coca-Cola Formula –... more to the table than just the idea, early proofs, and the team They must “own the right” of their technologies to compete with others who understand this Entrepreneurs must use IP to leverage their business and their plan, and to create the upside and downside protection to the investors © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 13 Challenges © 2001, ipCapital Group, Inc... Inc All Rights Reserved www.ipcapitalgroup.com 14 New Economy Companies are Built on Intellectual Capital Value Creation—Inventory at Source Value Extraction -Convert to capital Human Capital Human Capital Intellectual Assets Intellectual Assets Experience Experience Know-how Know-how Programs Programs Inventions Inventions Methodologies Methodologies Documents Documents Skills Skills Creativity Creativity... “Exclusitory” Rights – Stops others if enforced Patents – Protects idea or concept – 20 yrs Copy Rights – Protects the form (not the idea) – 50 yrs Trade Name – Protects the name or logo – 75 yrs Blocking Rights – Stops others from patenting Publications, make, use or offer for sale Documented Enabled Ideas © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 20 Ideas to Reality ©... www.ipcapitalgroup.com 11 The Number of Patents has Jumped U.S Patents Issued, 1963 - 1999 U.S Patents Issued, 1963 - 1999 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 U.S PTO © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 12 The Entrepeneur Needs More Than a Good Idea Entrepreneurs needs to bring... patenting Publications, make, use or offer for sale Documented Enabled Ideas © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 20 Ideas to Reality © 2001, ipCapital Group, Inc All Rights Reserved www.ipcapitalgroup.com 21 . Leveraging IP to Raise Funding and Improve Your Valuations in a Bear Market by John Cronin, CEO ipCapital Group, Inc. . April 15 th , 20 01 Leveraging IP to Raise Funding and Improve Your. Your Valuations in a Bear Market by John Cronin, CEO ipCapital Group, Inc. . April 15 th , 20 01 © 20 01, ipCapital Group, Inc. All Rights Reserved. 2 www.ipcapitalgroup.com Agenda Agenda Today’s. & David Kline, authors Rembrandts in the Attic © 20 01, ipCapital Group, Inc. All Rights Reserved. 11 www.ipcapitalgroup.com Companies are Taking Action to Manage Their IP Companies are Taking