- Often as an entrepreneur especially if you listen to your lawyer, you're told patent everything and you have this perception that patents are really valuable in the context of your business. For most companies especially software companies or any kind of services business, venture capitalists don't view your patents as having much materiality at all. There are definitely types of companies where patents do matter a lot. It is true that they matter in biotech companies or life science companies. It's certainly true that for a lot of hardware companies there are elements of patents that can matter but typically for a software company especially at the very early stages, patents are just irrelevant.
If you lead with your patents as an entrepreneur when you first encounter a venture capitalist especially if you're an early stage company, you're often doing yourself a huge disservice because you're showing that you don't really understand the relative value of patents in the context of what you're doing. Most VC investors are going to care a lot more again with the exception of a handful of different categories like biotech, those investors are going to care a lot more about your product, your team, what you're doing, how you're approaching the market, the kind of progress you've made and then if you have some patents or you have something that's patentable, that's just additive from their frame of reference.
So don't lead with that especially early in the fundraising process.
- Exploring potential stakeholders: friends, family, and more
- Finding a venture capital firm
- Breaking down the term sheet
- Taking on debt
- Asking for NDAs
- Accepting a no