The IP Question That Makes or Breaks Your Startup Funding

Jan de Vries · 2026-10-14

European startups raised €21.45 billion ($24 billion) in Q2 this year — the strongest quarter for venture funding in four years. On the surface, capital is back. But look one level down and the picture shifts. 65% of that money went to just 42 companies raising rounds of $100 million or more. Investors are getting pickier about where their money goes. OMERS Ventures calls its 2026 outlook a "return to discipline," with deeper scrutiny on traction, retention, defensibility, and resilience. The bar for raising has gone up, but not for the reason most founders think. It's not that investors stopped writing checks. It's that they're choosing harder. And one place that scrutiny shows up is the moment they ask about intellectual property. ### Investors Aren't Asking If You Have Patents When an investor asks about IP, they rarely mean it literally. "We've filed three applications" tells them almost nothing. What they really want to know is whether you understand which part of your company is genuinely hard to copy — and whether your protection actually covers it. Two things are happening here, though most founders only see one. First, the cost of building software has plummeted. In its 2026 outlook, OMERS Ventures argued that AI tools are making software faster to build, while durable moats in pure software are getting harder to establish. Software isn't less valuable — founders just need a sharper answer for what makes their business defensible. Second, the link between IP and funding outcomes has been in the data for years. A joint study by the EUIPO and the EPO found that startups with patent applications at seed or early stage had a 6.4 times higher likelihood of follow-on funding. That doesn't mean filing a patent makes you fundable. Investors aren't rewarding the document. The filing can signal that you've identified something differentiated enough to protect. Put those together and the question changes. Instead of "Do you have IP?", it becomes "Does your IP protect the part of this business a competitor can't simply rebuild?" ### A Patent That Doesn't Map to the Business Is a Cost, Not an Asset The most common weakness isn't the absence of patents — it's patents filed for the wrong reasons. The pattern is familiar: claims drafted around how the product looked on filing day rather than the mechanism that makes it work. Six months later, the product has moved on, and the claims protect a feature that no longer matters. A strong answer sounds different. It names the specific technical mechanism the claims cover. It explains why you filed where you did: a regional application because your commercial plan runs through several markets, or a national filing first with a PCT application to keep options open. And it shows clean ownership, with every contribution assigned to the company — including work by contractors and by founders themselves before incorporation. That last one catches more companies than any other. A founder who wrote the core algorithm six months before the company existed often still owns it, and nobody notices until diligence. > "The point is not to patent everything. It is to understand what is strategically defensible." It's worth being clear about the limits. A patent alone isn't a business moat, and no one can confidently say which forms of defensibility will hold as AI keeps compressing build times. Proprietary data, distribution, and speed of execution all matter. Some investors will weigh those as heavily as — or more heavily than — anything filed at a patent office. But that's an argument for a deliberate IP strategy, not against one. So when you're next in front of an investor, don't just count your patents. Be ready to explain how they protect what matters. That's the answer that gets you funded.