What investors really want to know about startups' intellectual property

European startups raised €21.45 billion ($24 billion) in venture funding in the second quarter of this year, the region's strongest quarter in four years, according to the data platform Crunchbase. However, 65% of that money went to 42 companies that closed rounds of €90 million ($100 million) or more. Investors are also becoming more disciplined: the venture firm OMERS Ventures describes its 2026 outlook as a "return to discipline," with deeper diligence on traction, retention, defensibility and resilience. Against that backdrop, the question of intellectual property (IP) matters more, as argued by Dominic Davies, a patent attorney and co-founder of Lightbringer.

The question is not how many patents you hold

When an investor asks about IP, they rarely mean patents in the literal sense. They want to know whether a founder understands which part of the company is truly hard to copy, and whether existing protection covers it. The cost of building software has dropped sharply, and OMERS Ventures argues that AI development tools make software faster to build while durable moats in pure software become harder to establish.

A joint study by the European Union Intellectual Property Office (EUIPO) and the European Patent Office (EPO) found that startups with patent applications at seed or early stage were associated with a 6.4 times higher likelihood of later funding. The author stresses this does not mean a patent makes a company fundable; a filing can signal that the company has found something differentiated enough to protect.

A patent that does not fit the business is a cost

A common weakness is patents filed for the wrong reasons: claims drafted around how the product looked on filing day rather than the mechanism that makes it work. A strong answer names the specific technical mechanism, explains where and why the company filed, and shows clean ownership, including work by contractors and by founders before incorporation.

The author acknowledges that a patent alone is not a moat; proprietary data, distribution and speed of execution also matter.

Build the strategy before the fundraise

The EUIPO-EPO study found that only 10% of startups raising seed rounds had filed for patents, rising to 28% at early growth stage and 44% at late stage. An application drafted in a rush before a data room opens rarely holds up, so the author recommends asking the hard questions about novelty and fit well before diligence.