Assessing a Startup’s IP: Key Questions to Ask

As an investor, you know that a startup’s intellectual property (IP) can be among its most valuable assets. A strong IP portfolio not only helps secure a company’s unique market position but also reduces competitive threats and enhances investment returns. And knowing how to dig deeper than a pitch deck’s glossy claims is essential for picking winners.

Below are practical questions to help you quickly gauge the strength and durability of a startup’s IP portfolio.

1. Establishing the basics of their IP assets

What to ask:

• “What forms of IP protection do you currently have in place (patents, trademarks, copyrights, trade secrets)?”
  
  Startups should be able to clearly identify which types of IP they rely upon. Specifics like patent numbers, trademark registrations, and details of proprietary technology are crucial.
• “Do you have any pending patent applications, and if so, in which jurisdictions?"
  
  Pending patent applications can signal early innovation. Ask about the expected timeframe to secure these rights and how the applications complement existing granted patents.

What to look for:

A firm understanding of their IP assets, including which are granted and which are still in process, shows that the team has its house in order. If they stumble or cannot articulate their IP portfolio, that’s a red flag.

2. Assessing the scope and quality of their patents

What to ask:

• “What problem does your patented technology solve, and how is it unique compared to existing solutions?”
  
  A well-protected innovation should solve a definable problem uniquely. The startup’s ability to differentiate its inventions from existing technologies suggests that its IP could be both valuable and defensible.
• “How broad are your patent claims, and were there any significant office actions or challenges during prosecution?"
  
  Understanding how thoroughly examined the patent was and the nature of any examiner objections can provide insight into its legal strength and the likelihood that it will stand up against competitors. A strong patent will include both broad and narrowly tailored claims protecting the innovation.

What to look for:

You want specifics and a deep knowledge of the status of their IP. Be wary of anyone who can only speak to general concepts and not the details that differentiate their IP from what came before it and other solutions in the market. The strongest patents have claims broad enough to offer meaningful market exclusivity, but not so broad that they’re easily invalidated. Detailed knowledge of examination history indicates a well-prepared, hands-on approach to IP management.

3. Understanding geographic coverage and strategy

What to ask:

• “In which countries or regions do you hold IP rights, and why did you choose those markets?”
  
  IP rights are territorial. A savvy startup will have prioritized key markets (e.g., the U.S., Europe, or Asia) based on manufacturing, sales projections, and competitor activity.
• “What is your plan for expanding IP coverage as you enter new markets?”
  
  A forward-looking strategy shows they’re thinking beyond their home territory, preparing for global competition and scaling.

What to look for:

A well-thought-out international filing and protection strategy signals long-term vision and an understanding of where future value lies.

4. Ownership

What to ask:

• “Who is listed as the inventor or owner of your patents, and are they still at the company?”
  
  Inventors who are no longer at the company can give you clues about internal turmoil and may create problems if the chain of title is incomplete.
• “Do you have clear assignment documentation?”
  
  Clear, uncontested ownership is crucial. Disputes over inventorship or assignment can weaken the enforceability of a patent.

What to look for:

A startup should have formal IP assignment policies. They should be able to explain inventors leaving the company and how the IP rights have been secured for the company.

5. Freedom to operate

What to ask:

• “Have you conducted a freedom-to-operate (FTO) analysis to ensure that you do not infringe on third-party rights?”
  
  An FTO analysis reduces the risk of future litigation. If they haven’t done it, they may face costly legal challenges down the road.
• “Who conducted the FTO analysis, and is there a plan for continuing to update it?”
  
  FTO analyses should be conducted by experienced attorneys. FTOs are only good as snapshots of risks at a given time and should be updated with changing product plans or if a meaningful amount of time has passed since the last FTO.

What to look for:

Proper documentation and evidence of thorough due diligence demonstrate that the startup is not building on shaky legal ground. A startup spending time on diligence indicates a company that is disciplined and preparing for the challenges ahead.

6. Defensive strategies and enforcement plans

What to ask:

• “Do you monitor competitors’ IP filings or enforce your IP rights proactively?”
  
  Monitoring the competitive landscape and being ready to enforce IP rights shows seriousness. Startups that view IP as a living, strategic asset — not just a static filing — tend to be better-positioned for success.
• “If a competitor challenges your patent or technology, do you have a strategy or budget allocated for defending it?”
  
  Enforcing IP rights can be expensive. A well-prepared startup will have considered how to respond if a competitor attempts to invalidate their patents or encroach on their protected space.

What to look for:

Having a plan to actively manage and protect IP suggests a maturity and readiness that can weather competitive pressures.

7. Alignment of IP strategy with business goals

What to ask:

• “How does your IP support your current and future business model?”
  
  IP should not exist in a vacuum; it must align with product roadmaps, commercialization plans, and exit strategies.
• “How do you see your IP contributing to your valuation as you seek future funding or potential acquisition opportunities?”
  
  Understanding the startup’s vision for leveraging its IP — be it in licensing deals, strategic partnerships, or as a negotiation chip in M&A — reflects the management’s business acumen.

What to look for:

A strong IP portfolio underpins a robust competitive advantage. When founders tie IP to their long-term commercial strategy, it typically signals that they value IP as a strategic asset.

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Bottom line

In a field full of enthusiastic innovators, IP can be the critical differentiator that sets certain startups apart. By asking the right questions and listening for informed responses, you can quickly gauge the strength and potential of a startup’s IP portfolio. Look for professionalism, depth of knowledge, a proactive protection and enforcement plan, and clear alignment with the company’s overarching business objectives. Diligence will help ensure that when you invest, you’re supporting sustainable, defensible innovation.