THE IP MOAT

06 May 2021

With an estimated net worth of $ 73 billion (!), Warren Buffet is one of the most successful investors of all time. He is the figurehead of value investing. Value investing is characterized by buying shares in undervalued but high-yielding companies. The idea is that over time, the value will float to the surface and the stock price will follow.

Warren Buffet, who has never stopped working and is in his 90's, is looking every day for companies with a unique market position. A value investor prefers to take as little risk as possible, because one of the rules of Warren Buffet is: don't lose money! Companies that operate in a highly competitive market and have little distinctive character are risky companies. As an investor you want a company to have a strong competitive position. In other words have a moat: a competitive advantage that prevents competitors from simply taking the position of the company by, for example, offering a lower price or a competing product.

Examples of moats are network advantages (think of Google with all the tools), high transfer costs (it is not easy change Microsoft programs) or high investment costs (think of a railway company). One of the most important moats are trade secrets, brands, design registrations and patents. Competitors must distance themselves from that, otherwise they risk lawsuits.

You try to distinguish yourself from competitors with innovation, distinctive packaging and strong brands. It is therefore important to obtain and protect these assets. This way you keep competitors at bay and your company becomes worth much more. There is a chance that sooner or later you will need investors for capital to grow further. And they, like Warren Buffet, will look at the market position, and more importantly, how it is protected.

Are you curious about how you can strengthen your company and add value? Then contact us. We will then perform an IP audit and advise you on what to register and/or protect which things are not worth the investment.

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