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When you invest in a startup, you’re probably investing in a company that hasn’t yet become profitable.

I don’t mean they have no revenue – in fact, I almost never invest in a startup that doesn’t.

But a startup in its early stages has one primary focus: growth. Growth costs money, whether for product manufacturing, software development, making key hires, expanding office space, or any number of other things a business may need to make more money.

A startup in the red may seem like a bad investment. But, actually, a company can be worth money in many different ways.

Some angel investors think revenue is the only important metric. Others focus on the technology. In my opinion, the best angel investors consider a long list of factors before they invest.

But there’s one thing I always look for that’s too often overlooked: intellectual property.

I get it. IP isn’t as glamorous a subject as, say, how much cash a startup has on hand, or whether the founders have made their investors millionaires before.

It’s a dry subject, to be sure. But it is incredibly important to a startup’s ability to take off.

Here’s what makes IP – patents, trademarks, and so on – so critical: many startups exist in the first place to develop and sell a product that never existed before.

And when that product solves a big problem in a big market, you’d better believe that competitors and other big players will be paying close attention.

Say that you have a stake in a company that’s invented a new type of phone battery. It lasts longer and charges faster than anything else on the market. That would be a massive breakthrough – worth billions of dollars, for sure.

With no patent in place, how long do you think it would take for the world’s industry leaders to swoop in and steal the idea?

Even in “stealth mode” – a method that involves operating a startup in secret – a startup with revolutionary tech is vulnerable to moles, hackers, and all manner of methods a competitor with billions of dollars to spare might employ.

That’s why there’s more upside to a startup that has its intellectual property legally protected. An idea that can’t be copied by one of the giants may well be acquired by them instead for a healthy profit.

Think of it this way: would you put your money in a bank with no lock on the door?

I didn’t think so. Neither would I. That’s why I always suggest that you check (and double-check) that any startup you’re considering for investment has done the legwork to protect its proprietary tech.

Until next time,

Neil Patel


Comments

19 responses to “Why Every Startup You Support NEEDS to Protect Their Tech”

  1. I’m on disability and have limited income but want to invest in my future and my grandkids future is this a good way for me to do this with as you say 50.00 is that on a monthly basis I can handle that or what’s the minimum and total max of investment and how would I know the results of my investments.

  2. I am currently on SS and have a heart condition that needs constant attention and creates many medical Bill’s. I need additional income to remove or ease that burden. I thank you for any help in achieving that goal.

  3. Thank you for sharing your information! I’m on disability an need help with extra bills that comes up!

  4. I am a woman trying to start a small business that benefits the elderly and handicapped in my community. I need help finding Grant’s. This is a for profit business. Is this seminar for me? I am taking care of my mother with Alzheimer’s in a wheelchair. I need income.

  5. I’m on disability with limited income and I would like to invest in my future, where I would not have to be worried about how bills are going to get paid and struggling to make it.

  6. Hi I’m on disability and I have two projects that I invented and one is is in the first stages of a patent and I need help and money to get the non provisional short on funds . But I would have the 50.00 dollars to try to make something work so please respond and thanks.

  7. I’m a sixty three year old on Ssdi with nothing to show for my 30 years of being a laborer I need a way to make a savings account in the case of something happening to me for my wife and kids to live on

  8. Please help me I’m on Ssd I’m only 39 I have a lot of health issues. I only get 782 a month & most of that pays only for in my medical I have no extra money I have no money I have two dollars in my account I struggle every month just trying to take care of my kids and be able to go anywhere gas money is like a ghost I need help I need more to live off of $90,000 has been stolen from me from me I have identity theft saying that I can’t even get a credit card when my moneys gone and I am on E! I am on E! in no way out no back up plan not even a dime to help myself no savings no credit cards no bank I’ve been doing this for five years and I’m tired please anybody any suggestions 18503804661 Is my phone number I’m sick and tired of signing up for stuff and it being a joke or lie if it can’t help me I don’t want it if they need money to invest first well I don’t even have that not even two dollars to give so please contact me if you have any suggestions are used to own my own business Julie Shields promotions marketing promotional company I made amazing money butHurricane Ivan took that from me and then somebody stole my business my name everything and they’re making money off of it there’s nothing I can do and they’re using my name I’ve got my own page do it yourself on Facebook Julie Shields diy Dollar Store ideas And I have a lot of fans they make me happy I don’t make any money but still they make my day

  9. I am looking for a way to make life better for myself and family,I still work full time plus!!!but I’m tired of fighting the daily fight to make others rich!!!i want to make my rich!!!i hope angel investing is the answer!!!

  10. Hello Mr. Patel,
    I must say that I have not been unable to take advantage of your experience and be immersed in all of fundamentals of investing. I need your expertise on starting a business. I have been looking into the demographics, income, and age gap of people that would undoubtedly buy my product. I know that you are extremely busy with all your subscribers however I would really like to talk to you one on one so I know that I’m going through the right channels and making sure that there is no patent infringement. Please I know it’s a big request I’m asking you and I hope you would consider my request.
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