The Tale of the “Pro-Bono” Startup
Once upon a time, in a country near near-away, there was a startup called “The90%”. The visionary CEO was in charge of moving money from VCs to the CFO, the CFO moved the money to the CTO, the CTO moved the money to the hard-working R&D group, and the R&D group, by some miraculous alchemy, transformed the money to something new, unheard of before.
They called it an “Invention” and immediately told all their friends and family about it. As the days went by, every time the VCs asked how their money is doing, the CTO proudly announced: “we don’t have it anymore!” and presented pictures of the shiny new “Invention”.
The VCs were very impressed, certainly, you do not see an “Invention” every day, and they too went home and told all their friends and family about the “Invention”. Everyone was excited, as now EVERYONE knew all there is to know about the “Invention”.
The local paper even run an editorial on how shiny this new “Invention” was. Readers were excited too, as they now knew all about the “Invention”, were able to use it freely, and it only cost them the price of the subscription.
One day, one of the more junior VCs asked if it is possible, if it is not too much hustle, to please somehow convert the “Invention” back to money, preferably to more money than it cost to produce it, as their partners are interest in some mythical concept named “ROI”.
When the CEO and CTO finally stopped laughing, they explained to the junior VC that their company is not named “The90%” for nothing – it is called that since it is doing what 90% of the startups in the world are doing – converting VC money to “Invention”, and then directly converting the “Invention” to “public knowledge”, without protecting the “Invention” with IP before it is published.
TL;DR: Why do most startups fail to turn their inventions into ROI—and how can they avoid it?
- Most startups (the “90%”) burn money turning inventions into public knowledge—without IP protection.
- By disclosing inventions too early, they lose the ability to protect and monetize them.
- Smart founders and VCs ensure inventions are legally protected before going public—this is what the successful “10%” do.
But avoiding the “pro-bono” trap is just the beginning. Once you’ve secured patent protection, the real challenge becomes turning that legal shield into actual revenue.
Monetization Strategies That Work
In today’s innovation economy, patents serve as critical assets that not only protect breakthrough ideas but also lay the foundation for long-term competitive edge. They are far more than mere legal documents; patents empower companies to secure market exclusivity, drive technological progress, and add tangible value to their company.
Securing and maintaining a patent requires thoughtful financial planning and a significant investment. The process begins with substantial upfront costs (including filing fees and expert legal counsel), designed to ensure that the innovation is robustly protected, followed by ongoing expenses such as maintenance fees and costs associated with enforcing patent rights. While these expenditures can be considerable, they are essential investments that help secure future revenue opportunities.
Strategic decisions about where to file your patent internationally can significantly impact your long-term profitability, as different markets offer varying monetization potential and enforcement capabilities.
Transforming a patented innovation into a market-ready product or service presents a direct pathway to significant revenue generation. This approach involves aligning the innovation with market needs through detailed product development and strategic marketing. By transitioning from a protected concept to a tangible offering, companies can recoup their investments and build a sustainable revenue stream that reinforces their overall value.
Alternatively, licensing your patent provides a powerful strategy to generate income while mitigating the risks and costs of product commercialization. Through well-structured licensing agreements, companies can permit third parties to utilize their patented technology, earning royalty income in the process. This model not only expands the reach of the innovation into new markets but also leverages the expertise and distribution capabilities of established partners, thereby enhancing overall profitability.
Ultimately, the goal is to profit from patent-protected inventions—otherwise, the organization essentially operates like a non-profit, lacking the financial returns essential for growth and reinvestment. I urge all innovators to review their current strategies on monetizing IP assets and to explore both product commercialization and licensing opportunities.
By optimizing your approach to patent monetization, you can ensure that your valuable innovations contribute directly to your bottom line and long-term success. Your past, current and future investors will thank you too.
However, the most successful companies understand that patent profitability isn’t just about avoiding losses or choosing the right monetization strategy—it’s about thinking bigger from the start.
The Compound Interest Effect of IP Investment
One of the main points I am trying to make with potential clients is that hiring a fractional IP Director is similar to other choices they already made in life, and with the same reasons. Going to school, investing in Real Estate, retirement savings, parenting, and planting trees, all these examples involve a leap of faith where current effort or investment will only pay off down the line.
The concept of compound interest is a perfect analogy for explaining the value of investing more upfront, as the long-term gains magnify significantly over time:
- Average Investment: If you save a small amount of money in a compound interest account, you’ll see growth, but the returns over time, while positive, remain modest.
- Bigger Investment: On the other hand, if you make a larger initial investment, the same compound interest rate applies, but the returns snowball significantly over time. The difference in growth between the smaller and larger investment seems minor at first, but over the years, the larger investment yields exponentially greater returns.
This is similar to hiring a fractional IP director:
- With a smaller upfront investment in basic IP management (what your competitors are doing), you’ll see some improvement in your portfolio, but it will be limited in scope.
- A larger investment in a high-quality, strategic IP director (what you will be doing as soon as you finish reading this post) – like the bigger savings amount – might seem costly initially, but the long-term improvement in your IP portfolio grows substantially, making the early investment much more worthwhile.
Just as with compound interest, the impact of a bigger initial investment is most evident after a few years, where the difference between average and high-quality investments becomes significantly larger.
TL;DR: Why does hiring a fractional IP Director early create outsized long-term value?
- Like compound interest, a strategic upfront IP investment grows exponentially over time.
- Basic IP efforts yield modest returns; high-quality IP leadership builds real long-term advantage.
- Founders and investors who invest early in expert IP strategy gain a competitive edge that compounds over the years.
If you are a founder and want the “compound interest” effect for your company, our comprehensive IP services for startups help you build the strategic foundation that creates exponential long-term value – let’s talk.
If you are an investor and want your portfolio companies to have an edge over their competitors – let’s talk too.
Conclusion: How to Profit from a Patent
- Protect before you publish – File patent applications before disclosing your invention publicly to avoid joining the “pro-bono” 90%.
- Choose your monetization path early – Decide whether to commercialize directly or license to others based on your resources and market position.
- Invest strategically upfront – Higher initial investment in IP strategy creates compound returns that separate you from competitors over time.
- Think portfolio, not single patents – Build a comprehensive IP strategy that creates sustainable competitive advantages across your business.
- Get expert guidance – Work with experienced IP professionals who understand both legal protection and business monetization to maximize your ROI.
