Intellectual property (IP) is crucial for early-stage companies as it protects their innovations, providing a competitive edge in the market. By securing patents, trademarks, and copyrights, these companies can prevent competitors from copying their products and ideas, which fosters a unique brand identity and builds customer trust. Then there’s the path to exit – a strong IP portfolio can significantly enhance the company’s valuation, making it more attractive to investors and potential acquirers.
There can be no argument that IP is at the bedrock of an early-stage company’s value, but for founders, there’s bad news on the IP front. According to a recent Associated Press report, intellectual property theft costs the U.S. economy up to $600 billion annually, with startups firmly in the crosshairs of hackers and other malicious actors.
In today’s competitive medical technology startup landscape, protecting your intellectual property is essential for maximizing the value of your enterprise. One man who is intimately familiar with the early-stage challenges of protecting IP is John Ashley, co-founder and CEO of Auctus Surgical and fractional CXO.
John is passionate about the importance of a robust IP strategy to ensure long-term success and attractiveness to potential partners and acquirers. With over 30 years of experience in the medical device industry, John Ashley has held CEO and executive roles at several leading companies, including DurVena, CoAlign Interventions, ANPA Medical, Fox Hollow Technologies, Sapphire Medical, Primaeva Medical, and Oratec Interventions. In each of these positions, he has successfully navigated mergers, buyouts, and IPOs. His insights and guidance have helped the early-stage companies he advises generate more than $1.25 billion in returns for investors.
Getting the Basics Right
According to John the nature of the startup environment and the focus of founders can often cause them to not see the wood from the trees, as John puts it, “Early-stage organizations are incredibly fast-paced environments and the pressure to get products or services to market can cause founders to focus exclusively on their core areas of expertise, be that tech or marketing – and often that means neglecting to set in place a structured strategy to protect intellectual property. They’re also extremely time-poor and that can have a knock-on effect when it comes to setting in place processes that mitigate against IP theft.”
Drawing from his extensive experience, John has created a comprehensive framework to ensure that early-stage med-tech companies have the foundations of a strategy to ensure that their IP is protected. John advises med-tech management to focus on three key elements of an effective IP strategy that can significantly enhance the value of the organization, these are:
1. Protecting a Product’s Value in the Market
“The fundamental goal of patenting technology is to prevent competitors from copying your technology and your product features,” says John. “This is crucial in all markets where you plan to compete, ensuring that your innovations remain unique and defensible.”
2. Preventing Competitors from Finding Workarounds
John advises, “It’s essential to go beyond simply defining your product and protecting it; you should also expand both vertically and laterally for broader protection.” This approach includes considering alternative methods, materials, configurations, and technology strategies to ensure comprehensive coverage against potential competitors.
3. Providing a Foundation for Future Technology Growth
“Your IP portfolio represents a significant portion of your enterprise’s value to potential partners and acquirers,” John explains. “Future acquirers want to see how broad and active your portfolio is, as it demonstrates the potential to develop new products and technologies.”
John Ashley shares a compelling example of an effective IP strategy: “I worked with a startup that initially had a dozen assets in their IP portfolio as they prepared to bring a product to market. After engaging me to expand that portfolio with a focus on enhancing their value for a potential liquidity event, we grew their assets to over 100, leading to a third-party valuation of $190 million.”
Opportunities Abound
The medical devices market size was valued at USD 534.45 Billion in 2023 and is projected to grow from USD 571.80 Billion in 2024 to USD 984.56 Billion by 2032 – and that means that entrepreneurs have fertile ground for innovation. However, in an age of increasing AI use and a proliferation of malicious actors, all the innovation in the world is not going to deliver a significant return on investment if IP is not prioritized.
According to John Ashley, research is key when it comes to protecting intellectual property. “If you aren’t going to do a comprehensive market analysis then you’re setting yourself up for failure. A great idea is not going to deliver returns if it is simply reinventing the wheel. Entrepreneurs need to be sure that they have analyzed market needs and that they develop an actionable plan to protect IP rights.”
As focused as he is on providing early-stage companies with the advice they need to dominate the market, John also believes that the key to empowering a new generation of entrepreneurs is through a dedication to lifelong learning and mentoring. He currently advises the Surgical Innovations program at UCSF, the Biomedical Engineering Department at the University of the Pacific, and serves as a Venture Mentor with the MIT Northern CA Alumni.
To learn more about John Ashley’s approach to early-stage med-tech success and how IP protection enhances operations and smooths the path to startup exit, visit his LinkedIn page or personal website.
