Intellectual Property - The Basis for Venture Capital Investments
Mario W. Cardullo

Venture capitalists want to maximize returns and minimize risks. The risks they must consider in reference to the intellectual property include: market, financial, management and technological. A new technology enterprise cannot normally afford litigation. It needs to devote its money, time and resources to technology development and commercialization. The threat of an expensive lawsuit may be sufficient to reduce the probability of venture capital financing. Patent lawsuits cost about $500,000 per claim if brought to trial, and trade secret suits cost from $300,000 to $500,000. Thus, intellectual property in the form of a trade secret may be more attractive to venture capital investors than a "weak" patent that may be open to litigation.
An example of the impact of intellectual property and its strengths is how companies that work with new enterprises value these properties. Catalyst Venture Partners is a group that "works with companies to get them ready for external investment whether that investment is sourced from individuals or institutions." Catalyst Venture Partners works only with enterprises "that have exceptional intellectual property and are in a position to achieve fast growth."