Question

As you continue to screen venture opportunities, is intellectual property an element to be included in the venture screening process? Why? Provide a rationale for your position. Respond to at least two of your classmates’ postings.

Answer 1

Yes, intellectual property is an element that has to be included in the venture screening process. Venture capitalist’s decision criteria include several factors like market attractiveness, product differentiation, managerial capabilities etc. Intellectual property is one of the important factors or elements.

The screening process involves a thorough analysis of the team, the business and the deal. The key factors that are looked into while evaluating the business are factors like intellectual property, high return, presence of a viable exit route, availability of realistic financial forecasts and high growth potential.

Intellectual property is the basis for venture capital investments as the invention or innovation with respect to a venture has to offer a sustainable competitive advantage. The objective of screening is to scan investment prospects so that returns are maximized and risks are minimized. The risks with regards to intellectual property that has to be considered are market, financial, management and technological risks.