Question

7 Explain the differences between Patents and Trade Secrets (compare the advantages/disadvantages of using one vs the other)

9          Explain the role of the investor pitch and outline the order in which you should tell your story.

Answer 1

Ans. 7) Trade secrets and patents have a lot in common like they are used to protect innovations, new ideas, designs etc. However, there are several differences between them.

Following are the differences between patents and trade secrets:

Patents	Trade Secrets
Comes with an expiry. Patent lasts for 20 years. (Dis adv.)	Trade Secrets does not have any expiry
Patents have strong conditions like the invention should be new, non-obvious, have utility, no prior example of similar thing etc. (dis adv.)	Trade secrets do not have a broad list of invention. The invention just has to be valuable and a secret. E.g. Food recipes of Coca Cola and KFC
Patents offer more security as it is easy in patents to infringe even if somebody innovated similar thing independently. (Advantage)	Trade Secrets only protects against misappropriation. If somebody comes with similar innovation independently, the secret is sunk
Patents require formal application, review by panel and registration. (Dis adv.)	Trade secrets doesn’t require any application or registration
Application fees are huge $30k - $50K. (dis advantage)	No application fees
Information enters public domain. (Dis adv.)	Information does not enter public domain

There are many disadvantages with patent as they are difficult to establish, costly to register and provide security for a very small period of time but the biggest advantage is, for the period of the patent, nobody else can innovate similar product/process etc. And if they do, infringement can cease such innovation.

Ans. 9) There are several startups that are self-funded and then there are startups where there are great ideas but no funds to push those ideas into the market. That is where these startups start preparing themselves for investor pitch. In an investor pitch, startups or organizations pitch their companies as their products in front of the investors, if the investors are impressed and intrigued by the ides, they invest in it else they may choose to not invest. For this reason, investor pitch plays a very important role as it can make or break your ideas and company.

For an investor to be able to relate to your product i.e. your company, it is important you narrate the story of your idea in a right order. Following is the outline of the order of your story:

1. Tell the investor about the customer and the problem they are facing
2. Define the market, size of the customer base, growth etc.
3. The proposed solution to the problem for customer
4. Explain about your business model, how you are going to connect customers with your solution
5. Go to market strategy. Type of sales: Direct or Indirect. How will you get to the customer?
6. Talk more about the skills, experience, diversity of team who will handle the company
7. Talk about resources required to make this idea work
8. Discussion on revenue model, margins, interest and growth of the company

These are the few pointers to keep in mind while creating pitch story. It is important to keep in mind the exit strategy also i.e. if the business starts growing, who would be probable acquirers or with whom you can merge.