Patent Analysis as Part of Technical Due Diligence

When evaluating a B2B software investment, one of my standard questions is: what's your IP strategy? The answers range from sophisticated ("we have 12 granted patents and 8 pending across our core inference optimization stack") to concerning ("patents are for incumbents, our moat is team and speed").

Neither answer is automatically right. But I want to understand what the company is thinking, and more importantly, whether it's accurate.

Why patents matter for tech investors

Not all software businesses need patents. But in areas with high R&D intensity, patent-heavy incumbents, or long product cycles, IP matters in several ways:

Defensive protection: Can competitors copy your core approach without meaningful effort? If yes, your moat is execution, not IP.

Offensive opportunity: Do you hold patents that give you leverage in competitive situations or cross-licensing negotiations?

Acquisition value: Strategic acquirers often care deeply about patent portfolios. A company with no IP is a talent acquisition. A company with strong IP is a technology acquisition — typically at a different valuation multiple.

Litigation exposure: Are there existing patents that could threaten your business? This is the most immediate risk.

What I look for

For early-stage companies, I'm not expecting a deep patent portfolio. I want to see that founders have thought about the IP landscape and have a realistic view of it.

For later-stage investments, I want to understand what's actually in the portfolio. Not just "we have 23 patents" — what do those patents claim? Are they core to the product or peripheral? Are the key claims likely to survive an IPR challenge?

Using PatentBrief for diligence

Traditional patent analysis in due diligence involves hiring patent counsel, waiting two to four weeks, and receiving a memo. That's the right approach for large rounds. For early-stage work, I want a faster initial read.

PatentBrief lets me look at a competitor's key patents and understand what's actually claimed versus what's marketing language. The "Does Not Cover" section is particularly valuable — it often reveals that the apparent scope of a patent is much narrower than the title suggests.

I can form a preliminary view before engaging counsel. That preliminary view shapes the questions I ask — which makes the legal engagement more targeted and less expensive.

The investor takeaway

Patents aren't always a moat. But the absence of IP strategy in a category where IP matters is a signal worth examining. PatentBrief has become part of my standard technical diligence toolkit — not as a replacement for legal counsel, but as a first pass that makes everything downstream more efficient.