Secrets to securing Dragons’ Den funding: Common Intellectual Property mistakes to avoid

Dragons’ Den is a popular reality TV series where budding entrepreneurs pitch to private equity investors hoping to raise capital to fuel future business growth. As Dragons’ Den broadcasts its nineteenth series, it is worth highlighting an important lesson the series has taught its viewers over the years.  

Anyone who has been watching the most recent series will notice that many entrepreneurs invest huge amounts of time and effort refining their initial business pitch, only to lose out on an investment late on in the process once the Dragons start scrutinising what Intellectual Property (IP) a business has. Why does this happen so often and what can be done about it? 

The reality is that many people running a business do not fully appreciate the complexity of Intellectual Property law. A recurring issue is trying to identify if a patent is vested in the company or whether it is with a founder or third party such as a developer. Another common issue is having no patent at all. The panel often complain that by not having a patent the business is potentially opening the flood gates for manufacturers to copy a product design.  

Interestingly, entrepreneurs can also make the opposite mistake with Intellectual Property – they think it’s a substitute for having the market/supply chain right or they present their design protection to the Dragons as though it was a patent. Or they overspend their budget on IP protection that provides in a worst-case scenario irrelevant protection.  

In addition, private equity investors like Intellectual Property as it can reduce risk. For example, a business can license Intellectual Property to organisations in international markets to accelerate growth. Even if a business does fail, an investor may can sell Intellectual Property to recoup some of their investment.  

Having provided legal support for a number of entrepreneurs and start-up businesses who have been successful in raising funds on the show, Lindsay Gledhill, Intellectual Property Partner, offers this advice.  

It is advisable that you consult someone with expertise before you file a patent.

"Firstly, very few self-drafted patents are granted - there is a technique to drafting them. Secondly, a granted patent is a powerful tool to restrict competitors from reproducing your invention. But thirdly, a patent is likely to be your biggest spend and you have to balance the possibility that it will be granted against the certainty that you will incur significant costs, not just on the filing date, but also when the examiner sends their comments; just before the first anniversary of the filing; on subsequent anniversaries; and at 2.5 years post filing - to name just the first key dates."

"You have to plan a balance between the income you hope to get from trade or Investment against the certainty of these patent costs. And all that time you must keep asking about the chances of grant and how useful any granted patent would be in reality. It's not a one-off action.”

It is important to note that IP is only one aspect of the due diligence process. In another Dragons’ Den themed, Looking for Dragons’ Den funding? Get your due diligence right, we published recently we discuss other important legal considerations that form part of the due diligence process. 

For advice on how our Intellectual Property team can help you protect, exploit, and defend your intellectual property, contact us today for an initial no-obligation consultation