IP as a New Value Driver for Sustainable Start-Ups

Total investment for climate tech firms, the pace of start-up development, and the average funding size have all increased during the last ten years. Early-stage venture financing for climate tech startups totaled US$418 million in 2013. However, overall venture capital surged by more than 3,750% in 2019 to $16.1 billion. While it is fashionable to be sustainable, little is known about how a business model benefits and successfully implements sustainable technology. Theoretical and realistic sustainability approaches share several similar characteristics: Enhancing sustainability often requires transition, innovation, or adaptation. The question is: What is the difference between “sustainable technology” and “sustainable innovation”? The ability to innovate in sustainability is a requisite business capacity, whether linked to minor incremental measures or extreme, revolutionary developments. There is, however, a lack of transparency and consistency in the terminology and a lack of demonstrated scientific grounding in value creation. To valuate a new venture or start-up is a critical and long-debated question in entrepreneurial financing. Determining a start-up or any other company’s economic valuation is one of the more challenging and vital discussions a founder can have with institutional investors. One of the greatest assets of a start-up and the cornerstones in innovation is intellectual property and intellectual property rights. This chapter will discuss how sustainability, defined through the Sustainable Development Goals (SDGs) metrics, is used as a new driver in the valuation of the technology and intellectual properties in order to reflect the true value of a company’s intellectual property when looking for financing through, for example, collateralization of its IP.