But maybe they should.
TL;DR (for the founders who are already late to three meetings)
You're busy; you're building something that matters. So here is the gist:
Startups with patents command valuations up to 93% higher at the angel stage than those without. This is not a typo.
58% of all venture capital from 2011 to 2020 went to startups with patents or pending applications. The VCs already know this. Do you?
Outlier Patent Attorneys gets patents approved 90% of the time, versus a 64% industry average. They achieve this with fewer rejections (1.7 vs. the industry's 4.2 for software), saving clients roughly $9,000 per application in the process.
Their pricing is predictable. Their communication is human. Their attorneys actually understand your technology. These three things are, in the traditional legal world, essentially miraculous.
Most importantly: patents are not just legal instruments. They are business assets, fundraising tools, negotiating chips, and — when done right — the difference between a company that gets acquired and a company that gets copied.
You can stop here, or you can keep reading and understand why. The why, it turns out, is more interesting than the what. It usually is.
I. The Startup IP Dilemma, or: A Brief Meditation on Being Robbed Slowly
Here is a thing that happens, with some regularity, in the startup world:
A founder builds something genuinely new. Something that works. Something that, if we're being honest, makes the old way of doing the thing look embarrassing in retrospect. The founder raises a little money, hires a few people, acquires some users, and begins to feel — cautiously, superstitiously, the way you feel on a first date that's going suspiciously well — that this might actually work.
And then a larger company, or a well-funded competitor, or a former employee who "got inspired," takes the thing. Ships a version of it. Maybe slightly different. Maybe not even that.
And the founder discovers, at the worst possible moment, that they have no legal recourse. Because they never protected it.
So it goes.
This is not a rare story. It's a genre. And it plays out against a backdrop that keeps getting more competitive: a record 3.7 million patent applications were filed globally in 2024 — the fastest growth rate since 2018, per WIPO. The IP landscape is not getting quieter. It's getting louder, more crowded, more contested. Every day a founder delays thinking about patents is another day their window of protection narrows.
And yet — and this is where the real absurdity lives — only about 23% of U.S. tech startups file for patents at all. The other 77% are, in a sense, hoping for the best. Which is one strategy. Not a great one, but a strategy.
The founders who do try to navigate the patent system often run into a second problem: traditional law firms. Which brings us to a particular kind of institutional dysfunction that would have fascinated both a novelist and a social scientist, and has frustrated approximately every startup founder who has ever hired a big-firm attorney.
The big firm model was designed for a different client. The client it was designed for has a legal department, unlimited patience for process, no cash flow concerns, and is not going to run out of runway while waiting for a conflict-check to clear. That client is not you.¹
What you get instead, often: lawyers who don't understand your technology, bills that arrive like unexpected weather events, drafts of documents that seem to have been written for a different invention by a different company, and a general sensation — familiar to anyone who has tried to explain machine learning to a 70-year-old litigator — of talking into a void.
The issue, as one patent strategist bluntly put it, is that "very bad patents are written for startup companies" by traditional firms — patents that miss the business objectives entirely, that protect the wrong thing, that leave the most defensible aspects of a technology completely exposed.
There is a better way. There is, actually, a firm that was built specifically to be a better way. But let's understand the stakes first, because the stakes are real and the numbers are alarming in the most motivating sense of that word.
¹ Unless you are, in which case, what are you doing reading a blog post? Your legal department should be handling this.
II. What a Patent Is Actually Worth — And Why the Number Will Surprise You
Here is what a patent is worth, concretely, to an early-stage startup:
A team of researchers at Harvard Business School and the USPTO conducted what they called a "patent lottery" — a study that used the quasi-random assignment of patent examiners (some strict, some lenient) to isolate the causal effect of actually receiving a patent. Not just correlated with. Caused by.
The results were not subtle.
Startups that obtained their first patent grew 55% faster in employment and 80% faster in sales over the following five years — translating to 16 additional employees and $10.6 million in additional cumulative sales. The same study found that patenting more than doubled a startup's odds of eventually going public. These are not soft, directional findings. These are hard, causal numbers.
Meanwhile, a study of UK high-tech startups by Oxford's Helmers and Rogers found that 83% of patenting startups survived to year five, versus only 60% of non-patenting startups. The patenting companies also grew 6–17% faster annually in total assets. The correlation between patents and survival is not a coincidence. It is, the data insists, a signal.
And the valuation numbers are something else entirely. PitchBook data shows that angel-stage startups with patents command 93% higher average valuations than those without.² Doubling a startup's patent application stock is associated with a 28% boost in pre-money valuations in subsequent financing rounds, per a Wharton study of 370 VC-backed semiconductor companies. Each additional patent application, in some analyses, corresponds to a roughly 45% increase in valuation in subsequent financing rounds — with a granted patent adding an estimated additional 28% on top.
These numbers are uncomfortable in the way that all important numbers are uncomfortable — they suggest that something you might have been treating as optional is, in fact, load-bearing.
The analogy that comes to mind, for whatever it's worth, is a house built without a foundation. It can stand for a while. It might stand for a while. But the longer it stands, the more precarious it becomes, and the more expensive the eventual repair. Except the repair in this case isn't a foundation; it's a legal battle, or a failed acquisition, or a product you built getting absorbed by a competitor who had the foresight to file first.
Intangible assets — patents chief among them — now account for roughly 90% of the S&P 500's market value. IP-intensive U.S. industries contribute over 41% of GDP and employ 62.5 million people. The economy, in the most literal possible sense, runs on intellectual property. A young tech company in today's market might have up to 90% of its value tied to intangibles. If those intangibles aren't protected, the company's value is, in a technical sense, theoretical.
² 93% is a number that deserves to be read twice. So here it is again: 93%.
III. The VC Already Knows What You Don't
Let's talk about the investors. Because this is where the patent conversation gets genuinely urgent for most founders.
From 2011 to 2020, approximately 58% of all venture capital went to startups with patents or pending applications. That is not a majority by accident. Venture capitalists are professional assessors of risk. They have seen what happens to unprotected innovations. They have watched portfolio companies get copied, outspent, and out-maneuvered by larger players who lacked the creativity to invent something but not the resources to replicate it.
In the largest VC decision-making study ever conducted — 885 venture capitalists at 681 firms, run in cooperation with the NVCA — 74% of VCs cited product and technology as a critical investment factor. A separate Berkeley survey found that 67% of investors stated patents were an important factor when funding startup companies. The NVCA itself is unequivocal: patents "protect an emerging company's innovative idea and deter competitors from stealing their idea, leading to significant venture capital investment" and are "fundamental to survival" for VC-backed startups.
The numbers on funding outcomes are, frankly, startling:
Startups with patents are 47% more likely to raise VC funding; when used as collateral, patents increase venture funding by 76% over three years.
Early-stage startups with patents earn 73% more capital than those without.
A joint EPO-EUIPO study found that European startups holding both patents and trademarks are up to 10.2 times more likely to secure early-stage funding than those with neither.³
Having at least one patent application reduces the time to first VC investment by 76% for biotech startups.
69% of VC-financed companies hold at least one patent, versus just 37% of non-VC-financed companies.
The signal here is not subtle. The investors see the patents. They weight the patents. They fund the patents.
Here is the thing that is worth sitting with: most of this signaling power is concentrated in the early rounds — seed and Series A — precisely when information asymmetry is highest and investors have the least other information to work with. In the early rounds, a patent is doing an enormous amount of communicative work. It is telling a story: this company has something real, something unique, something that cost them time and money to protect because they believed in it enough to protect it. That story, backed by a government-granted monopoly on an invention, is worth considerably more than the same pitch without it.
Outlier Patent Attorneys understands this dynamic with a precision that traditional firms don't. They use a VC benchmarking tool to understand how patents might influence different investors — what types of patents certain funds care about, what technical areas align with their thesis. The result is an IP portfolio that functions as fundraising infrastructure, not just legal paperwork. Filing before your Series A is not just advisable. It is, the data suggests, something close to essential.
³ 10.2 times. That is not 10.2%. That is a multiplier. If you started with a 5% chance of getting funded, patents take you to roughly 51%. If you started with a 10% chance, you're now looking at over 100% — which doesn't work mathematically but suggests that the effect is large enough to make the arithmetic break down at the edges.
IV. The Startup IP Dilemma, Part Two: Why Your Lawyer Probably Doesn't Get It
Now let's return to the law firm problem, because it deserves more than a mention.
Traditional patent law was not designed for startups. It was designed for companies with time, money, and patience for process — companies where the goal is comprehensive coverage and the cost is essentially irrelevant. Large corporations file patents the way they file everything: systematically, bureaucratically, with armies of people and no particular urgency.
Startups are not this. Startups are, by their nature, a bet against time. Every month of runway spent on legal confusion is a month not spent on product, users, revenue. The misalignment between what big firms provide and what startups need is not a bug in the system; it is a structural feature of the system that nobody ever fixed.
Until, arguably, firms like Outlier.
What Outlier does differently starts with something that sounds simple and is actually quite difficult: they think about patents the way founders think about businesses. Not as legal artifacts to be filed and forgotten, but as strategic assets to be deployed. Every patent filing is interrogated with business questions: Which aspects of your technology could create a genuine competitive moat? Where can IP provide a chokehold on competitors — what Outlier calls "chokepoint" patenting, targeting the technical bottlenecks that any competitor would have to pass through? What does your IP story look like to a Series A investor, and is it compelling?
These are not the questions a big firm asks. A big firm asks: what did you invent? Can we file on it? Great, here's our retainer agreement.
The founder mindset is not just a philosophy at Outlier. It's operationalized. They right-size IP strategy to actual startup constraints — helping founders identify the highest-leverage patents rather than filing everything that moves and billing for the privilege. They identify "hidden inventions," the innovations in adjacent or supporting processes that a founder might not have thought to protect. They match every filing to a business milestone: funding rounds, go-to-market timelines, acquisition prep.
And — this cannot be emphasized enough — their attorneys actually understand your technology.
This sounds like a low bar. It is, in practice, an astonishingly high one. If you are building in AI/ML, AR/VR, medical devices, consumer hardware, or software infrastructure, the gap between an attorney who deeply understands your domain and one who does not is the difference between a patent that actually protects your innovation and a patent that is, in the most polite possible framing, decorative. An attorney who doesn't understand your technology drafts claims that miss the nuance, fail to anticipate variations, and leave the most defensible aspects of your invention unprotected. An attorney who does understand it drafts claims that cover not just your prototype but likely future iterations — building a moat, not a fence.
As one founder put it, after switching to Outlier: "My previous lawyer just didn't grasp the machine learning aspect of our product. With Outlier, I finally felt understood."
V. The Numbers Inside the Numbers
Let's talk about the operational stuff, because it is genuinely impressive and because numbers, when they are real numbers, matter.
Outlier Patent Attorneys gets patents approved 90% of the time. The industry average is 64%. This gap is not random noise. It is the product of a three-step, data-driven process: business strategy analysis, patent landscaping (identifying "greenfield" opportunities — areas where no existing patents obstruct the path), and prosecution analytics that forecast likely examiner rejections before they happen and allow the application to be drafted in ways that preempt them.
The result: Outlier clients average 1.7 office action rejections before patent allowance. The software industry average is 4.2. Every office action is an expensive legal response, weeks of delay, and founder time spent in legal limbo instead of building. Fewer rounds means faster approvals, which means you get to say "patented" — not just "patent pending" — earlier. It means you enter M&A negotiations from a position of strength. It means your patent portfolio is actually growing on a timeline that matches your company's trajectory.
On costs: clients save approximately $9,000 per patent application because of Outlier's efficiency in minimizing rejections. The pricing model is transparent — flat fees or capped fees, not hourly billing's inexorable accumulation. You know what you're spending before you spend it. For a startup tracking cash flow to the dollar, this is not a nice-to-have. It is existential.
And the communication — the thing that traditional firms are, statistically and anecdotally, quite bad at — is handled differently here. Half of clients who fire their attorneys cite communication problems as the primary reason. Outlier's approach is the opposite of the black-box model: candid risk assessment up front (if a patent idea has low odds, they'll tell you before you pay to find out), plain-language explanations of every document, and what one founder described as a remarkable quality: "They were able to tell us what was going to happen before it happened, so there weren't any surprises."
No surprises is, in the chaos of a startup, an almost unreasonably valuable thing to offer.
VI. What the Exit Looks Like (And Why It Matters Now)
Consider, briefly, the acquisition scenarios. They are instructive.
In 2012, Google acquired Motorola Mobility for $12.5 billion. The most valuable part of Motorola was not its phones. It was the company's 17,000 patents. In 2011, a consortium of Apple, Microsoft, and others paid $4.5 billion for Nortel's 6,000-patent portfolio. In 2019, Apple acquired Intel's modem patent portfolio for approximately $1 billion. These are not edge cases. These are demonstrations of what IP is worth when it's done right, and at scale.
For startups, the dynamic plays out at smaller but still decisive scale. Research shows that acquired startups are almost twice as likely to hold patents as still-operating private startups — and almost three times as likely as failed startups. The patents are not the whole story of survival, but they are a meaningful part of it.
Dropbox built a portfolio of 500+ patents before its IPO, protecting the algorithms and multi-user coordination systems that powered its business. When Dropbox went public, those patents were part of what justified the valuation. VC-backed IPOs with at least one patent at the time of public offering outperform other VC-backed IPOs substantially in three-year post-IPO market returns: -7.1% versus -23.3%. The difference between a -7% return and a -23% return is, for many investors, the difference between a fund that survives and one that doesn't.
And then there's the defensive case — the story of what happens when you don't build an IP moat and then need one.
Before its IPO, Facebook had very few patents. When Yahoo sued, Facebook spent hundreds of millions of dollars in an emergency scramble to acquire patents from AOL, IBM, and Microsoft — patents they needed not to protect innovations they'd already filed but to build a defensive arsenal retroactively. It worked, barely. It was expensive. It was stressful. It was entirely preventable.
U.S. patent litigation filed 3,806 new cases in 2024 — a 22% increase over the prior year — with $4.3 billion in damages awarded. The litigation environment is not getting gentler. Building an IP moat before you need it is not paranoia. It is preparation.
Outlier's "chokepoint" strategy addresses this directly: rather than filing broad, shallow patents on obvious features, they identify the technical bottlenecks in your platform — the processes or components that any competitor would have to replicate to build something comparable — and secure protection there. The result is a defensive moat, not a decorative fence.
As one client CEO noted: "Outlier's approach to patents made a big difference in M&A conversations." That difference, in dollar terms, can be enormous.
VII. A Note on What All of This Means
Here is the honest version of the case for patents and for Outlier:
Building something is hard. It takes years of your life, relationships sacrificed, bad decisions corrected, good decisions made too late. The thing you build — if it works, if it really works — encodes something true about how the world could work differently. That's what innovation is. It's a true thing.
The world being what it is, true things have a way of getting taken. Not always. Not inevitably. But enough to have generated an entire body of law designed to prevent it, imperfect and expensive and slow though that law often is.
Patents, at their best, are not bureaucratic annoyances. They are commitments — a founder's declaration that what they built is distinct and original and worth protecting. They are also, it turns out, powerful business tools. The data on this is not ambiguous.
What Outlier has built is a way of doing this that works — that gets the patents approved at a higher rate, faster, for less money, with a strategic coherence that serves the actual business. Their approach treats founders like the intelligent, time-constrained, capital-constrained people they are.
At only 10% of seed-stage startups, patent filing is rare. By late stage, 44% of funded startups have filed. The correlation between filing and surviving, between filing and getting funded, between filing and eventually exiting — is consistent across studies, geographies, and decades of data.
So. You're building something.
The question is whether you'd like to keep it.
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Read the data: Patents & Startups — Empirical Evidence →
Sources: WIPO World IP Indicators 2025 · NBER/Harvard "Patent Lottery" Study · EPO-EUIPO Joint Study on Startup Funding · NVCA IP Policy · USPTO Startup Resources · WIPO Magazine on IP Financing · Helmers & Rogers, "Does Patenting Help High-Tech Start-Ups?" Research Policy (2011) · Hsu & Ziedonis, "Resources as Dual Sources of Advantage," Strategic Management Journal (2013) · Gompers et al., "How Do Venture Capitalists Make Decisions?" Journal of Financial Economics (2020) · PitchBook Startup Fundraising Review (2020)