India is home to 3,59,133 self-declared and 1,56,976 DPIIT registered startups (As on 11 March 2025, www.startupindia.gov.in). These startups and their entrepreneurs are brimming with energy and want to expand their businesses. Although funding opportunities in terms of Angel Investors, Venture Capitalists, and Private Equity are readily available, however, these options come at a cost of founders losing a significant grip on their ownership share of the startup. However, there is another less explored path to startup funding that can generate significant funds for startups, but rarely comes to the minds of startup founders, i.e., leveraging the intellectual property created in the startup to generate funds. This can be done in several ways. In this article, we are exploring how, by filing and obtaining intellectual property rights such as patents, designs, copyright, trademarks, in foreign jurisdictions, startups can generate funds.

Often times, what differentiates and provides value to a startup over legacy players in the market is the intellectual property that the startup generates. This intellectual property oftentimes is underutilized with respect to its full potential. Many Indian startups, for example, choose to file patents and designs, only in India despite the technology being useful in many countries outside India. This prevents the startup from capitalizing on several licensing and collaboration opportunities around the world. As a hypothetical example, an electric vehicle startup in India that makes some advancement in the drive train of the vehicle can leverage its patent portfolio in the US or EP by licensing it to partner companies in those jurisdictions, even if the startup itself does not enter those markets by itself. However, this rarely happens as of date.

In the developed markets, such as the United States, European Union, United Kingdom, and Singapore, there are several intellectual property monetization opportunities available for startups to generate revenues:

1. Licensing or Assignment of Intellectual Property in foreign markets:

Since licensing opportunities of intellectual property assets, such as patents, in the developed markets such as the United States are much more abundant in comparison to India, Indian startups can strategically file a portfolio of patent applications in the United States and seek licensing opportunities to generate income. Similarly, in some cases, sale of intellectual property can also be executed in exchange of funds by assignment. Since both licensing and assignments can be jurisdiction specific, Indian startups can maintain their ownership in the markets of their interest while sell or license the rights in markets they do not intend to enter themselves, such as United States or Europe, or Japan, or China, etc.

2. IP backed Loans

In several developed markets, IP backed loans are available as a legitimate business financing option for SMEs. IP backed loans take intellectual property assets, such as Patents, Designs, Copyrights, Trademarks, etc. owned by a startup or SME as collateral for lending. Indian startups with strong IP portfolio in jurisdictions such as the United States of America (USA) or Singapore can also secure IP backed loans.  

3. Cross-Licensing and Collaboration Agreements

Indian startups can also get into cross-licensing and collaboration agreements with foreign companies to secure additional funding for themselves, while also getting access to partner foreign firms’ technology, based on the agreement.

Roadmap to unlock global funding opportunities through IP

An Indian startup can leverage their intellectual property assets to secure these funding opportunities, by developing a strong technology strategy and corresponding Intellectual Property strategy, generating inventive ideas in technology areas core to the business, and testing and screening the ideas using thorough prior-art searches. The startups can then file provisional Indian Patent Application for the screened ideas. Once the provisional applications are filed, the startups can create a prototype and/or a minimum viable product in the one-year period available for filing complete application and international application. On the basis of learnings from the development of the prototype and/or minimum viable product, the startup can file complete application in India, along with a corresponding PCT Application within the one-year time period from the date of filing. A PCT Patent Application allows inventors to file a single patent application that can be recognized in multiple countries and regions, including, United States, China, Europe, Japan, Canada, Australia, Brazil, South Korea, Russia, Mexico, South Africa, and India. These countries and regions are among the 150+ PCT contracting parties, which allows applicants to seek patent protection in multiple jurisdictions with a single application. It provides an international filing process, giving applicants more time to decide where to pursue patent protection. The startup can repeat the above process to create a portfolio of at least 5-10 such applications closely related to the core product offering of the startup business.

After building a strong PCT Application portfolio, within 30/31-month window for the national phase entry of the PCT application, the startup has to find potential licensees or partners for specific foreign jurisdictions, such as United States, Europe, United Kingdom, Australia, Singapore, etc. Once potential licensees or assignees in some jurisdictions show interest in licensing your startup’s technology in their jurisdiction, the startup can enter national phase in those jurisdictions. This can be done by the startup itself or by the potential licensee, if said licensee agrees to bear such costs as part of the terms of the license agreement. The startup can execute the licensing or assignment agreements, and receive royalties/funding from the Licensees or Assignees for the licensed IP assets.

In case the startup wishes to avail a loan by placing Intellectual Property as collateral, the startup may have to follow the regulations of specific jurisdictions, such as the US or UK, to secure such loans and the terms and conditions of the banking organization providing such loans.

The above was a much-simplified big picture overview of how an Indian startup can go about unlocking the global potential of their Intellectual Property asset and secure funding for growth through its own IP asset without diluting share capital. However, each step described above in itself is a complex multilayered process, and startups must seek professional advice while exploring this opportunity.