Do Patents Really Help Startups Raise Funding? Evidence from the U.S. and Europe
When founders talk about fundraising, intellectual property often feels like an afterthought. You’ve got traction, a vision, and maybe even early revenue—so do patents really matter when it comes to convincing investors?According to multiple studies in both the United States and Europe, the answer is clear: yes, patents significantly increase your odds of attracting funding. In fact, the data show that both patent applications and grants play a role in signaling quality, unlocking capital, and driving startup growth.
Patents as a Signal to Investors -->
The National Bureau of Economic Research (NBER) studied how patents influence venture capital. Their findings? Simply filing for a patent application strongly predicts whether a startup secures VC backing. Once you control for applications, having the patent granted adds less additional signal, but the act of filing itself already makes investors take notice.That makes sense—applications show investors you’re serious about protecting your technology and creating defensible value. Even if a patent isn’t granted yet, the filing signals a founder’s foresight.
The Impact of Your First Patent -->
Researchers Joan Farre-Mensa, Deepak Hegde, and Alexander Ljungqvist dug even deeper into what they call the “patent lottery.”They found that when a startup’s first patent is approved, it experiences:
• 53% greater probability of attracting venture capital
• 36% higher employment growth over five years
• 51% higher sales growth over five years
These effects were most pronounced for early-stage and less-visible startups—precisely the kind of companies that need strong signals to stand out.
USPTO Data: Patents as Collateral -->
The U.S. Patent and Trademark Office (USPTO) has also confirmed the fundraising benefits of patents. In a 2022 report, they noted that when patents are used as collateral, venture capital funding rises by 76% over the next three years. They also found that startups receiving their first approved patent saw 55% more employee growth and 80% higher cumulative sales within five years, compared to their non-patenting peers.
Patents aren’t just legal tools—they’re business assets that can be leveraged to secure capital and accelerate growth.
Europe Shows the Same Story -->
This isn’t just a U.S. phenomenon. The European Patent Office (EPO), in partnership with the European Union Intellectual Property Office, recently studied thousands of European startups. Their 2023 report found that:
• Startups with patent rights are 10 times more likely to secure venture capital funding than those without.
• Having a mix of both patents and trademarks further boosts the likelihood of success with investors.
As the EPO summarized: “IP rights are a key factor for attracting funding and accelerating growth”.
Why This Matters for Founders -->
If you’re a technical founder, here’s what the U.S. and European research shows:
• Patent applications alone matter. You don’t have to wait for approval before they start signaling value.
• First approvals are a milestone. They can meaningfully change your odds of getting funded, hired, and acquired.
• Patents can be financial assets. Beyond signaling, they can literally be used as collateral to unlock investment.
• The effect is global. From Silicon Valley to Berlin, patents help startups stand out in the fundraising race.
For startups trying to raise in a competitive environment, patents are a proven way to strengthen your story.
Making Patents Accessible -->
At Idea Clerk, we believe every founder should have access to these advantages—without spending $10,000+ on outside counsel or waiting months to get started. That’s why our platform helps you go patent pending the same day, with filings aligned to the standards investors (and attorneys) expect.
Free to try for Indie Hackers! https://app.ideaclerk.com/sign-up
Defensible IP is no longer just for big companies. It’s a tool you can use today to stand out, attract funding, and scale with confidence.
Interesting data, but I think we're looking through the wrong end of the telescope. Everyone sees the patent as a signal for investors. I see it as a mirror for the founder.
The real value isn't the stamped PDF; it's the brutal clarity the application process forces on you. It's the ultimate forcing function to define your secret sauce beyond buzzwords. That clarity is what actually sells, not the piece of paper. The patent is just the receipt for doing the hard thinking.
So, the real question for a founder isn't "Will this get me funded?" but "Will this process make my value prop invincible?"
@LeanNeural, that's a great way to look at it. Going through the process of creating a patent application definitely forces critical thinking about what's important and distinguishing about one's solution.
Really interesting breakdown — especially the point that applications alone send a strong signal. A lot of founders still think they need a granted patent before investors will care, but the data says otherwise. I’d love to see more discussion on how early-stage startups can balance the cost and speed of filing with the need to move fast on product. Have you seen examples of leaner patent strategies that still work for fundraising?
Thanks @nitulabs! Traditionally, it's like Cost, Speed, & Quality--pick two :) However, there are many services now that let you get patent pending quickly at a low cost. That, then, leaves the issue of quality. I've written about assessing patent quality here: https://ideaclerk.com/blog/how-do-i-know-if-my-patent-application-is-high-quality
Patents significantly enhance a start-up's funding ability. Studies indicate that startups with patents are up to 10 times more likely to attract venture capital compared to those without. Additionally, possessing both patents and trademarks further increases this likelihood. Intellectual property rights serve as strong signals of innovation and market potential. Therefore, integrating a robust patent strategy can be pivotal to fundraising success.
Can I get patent pending without an attorney?
Yes, you can! You can file a provisional patent application with the USPTO on your own, which gives you ‘patent pending’ status. An attorney isn’t required, but many people still consult one to avoid mistakes in the filing that could hurt later. Have you already drafted your idea or are you still in the early stage?
I'm early stage, but would like to avoid going through attorneys if possible.
Totally get that a lot of early-stage founders feel the same way. You don’t always need a big law firm at this stage. I know an expert who helps entrepreneurs with patent applications in a practical, affordable way without all the heavy attorney fees. Want me to connect you?
Yes, you can always file patent applications on your own behalf. Provisional patents get you "patent pending" status and only cost $120 to file.
Thanks for sharing!