We all know, we have all been there, you are either a founder or one of the first employees, you go on Zoom with a potential investor, you talk about how nice it is to meet each other, about the person making the connection, and how exciting everything is in your sector these days.
You do your best to present your technology, the problems it tries to solve, how good your solution already is (+10% if you are the CEO, -10% if you are the CTO), how good your solution will be in the near future (several days if you are the CEO, several months if you are the CTO), and how much better you are than the competition. It is all smiles until the investor drops the numbers bomb – “how many patents do you have?”
There are so many ways to respond, and your mind rushes between the most direct, and the most diplomatic, and anything in between.
It’s like 10,000 spoons, when all you need is a knife
Obviously, if your company has been founded in the last 1-4 years, chances are you have exactly 0 patents. There is simply not enough time to research, file a Provisional, do some more research, file a PCT, file National Phase application, wait your turn, finish prosecution, wait for Opposition period to end, and be granted a patent.
The strange thing is that the investor already knows that, so the question itself is weird. So why is the investor asking about numbers?
What you should know is that more often than not, the investor is asking because s/he plays the quantity game, and the reason the investor plays the “quantity game” is because the investor does not play the so-much-more-substantial “quality game”.
What is the “quality game” you ask? It is the effort to assess the quality of the company’s IP strategy, decision making, and patent applications.
As Alanis Morissette wrote, playing the “quantity game” is like having ten thousand spoons (oops, I meant having a wide portfolio of useless or weak patents) when all you need is a knife (sorry, I meant one strong claim in one strong patent which covers the right technology). Who cares about numbers?
If you are a founder and want your company to play the “quality game” – let’s talk.
If you are an investor and want your VC to start asking the right questions – let’s talk too.
TL;DR
Iinvestors often know early-stage companies won’t have many, if any, granted patents.
Investors are looking for an easy metric because they don’t know how to assess IP quality.
Shifting the conversation to IP strategy and substance over numbers.
