Startups without patent protection are not successful in the long term

There may be different reasons why someone founds a startup. One important reason might be that I someone wants to create an income with a startup. Although it should be clear to everyone that the first months and years will be difficult, founders want to bring some security to their business in the medium and long term. A stable, successful business model allows them to pay their own salaries as well as those of their employees. A robust business model is also a prerequisite for a possible exit (sale of the own startup), which for many founders is a desirable reward for the entrepreneurial risk taken.

A prerequisite for a successful startup is that the offering differs from the existing one. The product or service must be better than the market offer. Of course, this alone is not enough for a startup to be successful. But if the plans really turn out to be successful, this will also inspire competitors. They will in turn try to share in the success, which negatively affects the USP (unique selling proposition) of the startup and thus reduces the revenue and value. To prevent this, various strategies are possible.

Already in 1991, investor legend Warren Buffet said: "The most important thing in evaluating businesses is figuring out how big the moat is around the business". A moat is the competitive advantage a company has over its rivals, resulting from deep-rooted advantages such as ownership of intellectual property, lower capital costs, a network effect or brand recognition (for more information, see https://www.masterclass.com/articles/economic-moat-types). This combination of tangible and intangible advantages can sustain a company's market share for years or even decades while competitors struggle to bridge the "economic divide."

One of the (few) promising strategies for building a moat of a startup is to protect the business idea with patents.

With an intelligently set up patent strategy, patents can initially be created and filed at a low financial cost. Only after some years larger amounts are due for the internationalization of the patents. In case of a successful economic development, the financing should be unproblematic after a few years. In the other case, the patents can be dropped without further cost consequences.

It is worthwhile to think about the possible own "moat" when founding a company.