The Role of IP in Raising Growth Capital

By George Likourezos, Esq.

Partner, Intellectual Property Attorney at Carter, DeLuca & Farrell LLP

In the competitive world of growth-stage companies, securing capital is not just about revenue projections or market size—it’s about defensibility, differentiation, and long-term value. Intellectual property (IP) plays a critical, often underestimated, role in raising growth capital. For many startups and emerging companies, IP is not only a legal asset but also a financial instrument that can significantly influence valuation, investor confidence, and deal outcomes.

Why IP Matters to Investors

Investors are fundamentally risk managers. When evaluating a company, they look for unique advantages that cannot be easily replicated. Intellectual property—whether in the form of patents, trademarks, copyrights, or trade secrets—signals to investors that a company has built or is building a defensible market position.

Patents, in particular, can create strong barriers to entry. They demonstrate that the company owns proprietary technology or processes that competitors cannot legally copy. In sectors like life sciences, software, AI, and cleantech, a robust patent portfolio can be the single most valuable asset on the balance sheet. It shows that the company isn’t just building products—it’s building a moat.

Trademarks and brand assets also matter. In consumer-facing industries, a recognized brand and protected trade dress can support premium pricing and customer loyalty. Meanwhile, copyrights and trade secrets can protect creative works, algorithms, and business methods, adding further layers of exclusivity.

IP as a Valuation Driver

The presence of well-protected IP can boost valuation multiples during funding rounds. Investors often assign higher valuations to companies that demonstrate:

• Strong patent portfolios in key markets
• Clear IP ownership (no ambiguity with contractors or co-founders)
• Active IP strategies (e.g., ongoing filings, international protection)
• The potential to monetize or license the IP in the future

In due diligence, IP can either elevate or diminish investor interest. Companies that have taken the time to file, prosecute, and maintain IP rights show discipline and foresight. Conversely, vague ownership structures, lapsed filings, or weak claims can become red flags, leading to lower valuations or failed deals.

Aligning IP Strategy With Growth Strategy

To leverage IP effectively during a capital raise, the IP strategy must align with the overall business strategy. This includes:

• Filing patents that support core product features, not just peripheral innovations.
• Protecting IP in key jurisdictions where the company plans to operate or expand.
• Ensuring freedom to operate (FTO) so that the company isn’t exposed to infringement claims as it scales.
• Regularly auditing IP ownership, especially when working with contractors, universities, or co-development partners.

Timing also matters. Investors prefer to see IP in place before a funding round, not promises that it will be filed afterward. If IP filings are pending, companies should be prepared to explain the scope and strategy clearly.

The Role of IP in Pitching Investors

When preparing pitch materials, many founders mention IP as an afterthought. That’s a missed opportunity. Instead, companies should highlight IP in both the pitch deck and data room:

• Include an IP slide summarizing patents, trademarks, and copyrights, with filing dates and jurisdictions.
• Use visuals to explain how the IP supports the product roadmap or blocks competitors.
• Be ready to answer detailed questions about ownership, enforcement, and competitive landscape.

A proactive IP narrative helps shift investor perception from “this is a cool product” to “this is a strategically protected business opportunity.”

Licensing, Monetization, and Non-Dilutive Capital

Another way IP supports capital strategy is through licensing and monetization. For companies with strong but underused IP, licensing to third parties can generate non-dilutive revenue that reduces reliance on equity raises. In some cases, IP can be used as collateral for debt financing, particularly if the company has recurring revenue tied to patented technologies.

Certain federal and international grant programs also look favorably on companies with strong IP positions, creating access to non-dilutive capital. This can be especially valuable in sectors like renewable energy, biotech, and aerospace.

Building IP Credibility Over Time

Ultimately, IP is about more than just legal protection—it’s about signaling. When a company shows that it’s thinking strategically about IP, it builds credibility with current and future investors. This is especially important in later-stage funding rounds or strategic exits, where acquirers may be buying the IP just as much as the team or technology.

To that end, growth-stage companies should work closely with experienced IP counsel to ensure that their IP strategy evolves as the business scales. This includes regular portfolio reviews, foreign filing decisions, competitive monitoring, and preparation for due diligence events.

Conclusion

In raising growth capital, intellectual property is a key asset that supports valuation, investor confidence, and long-term strategic optionality. Startups and growth companies that treat IP as a core part of their capital strategy—not a box to check—will have a significant edge in attracting funding, protecting their innovations, and creating enduring enterprise value.

How Carter, DeLuca & Farrell Can Help

At Carter, DeLuca & Farrell LLP, we work closely with startups and growth-stage companies to align their IP strategies with their business and funding goals. Our team of attorneys—many with advanced technical degrees—brings deep experience in patent drafting, prosecution, portfolio development, and IP due diligence. Whether you’re preparing for a capital raise, building a defensible patent portfolio, or seeking guidance on IP ownership and licensing, we provide practical, business-focused counsel to help maximize the value of your innovation. For a free consultation by the law firm of Carter, DeLuca & Farrell LLP, made available through Spotlight Family Office Group, please contact us at Info@SpotlightFamilyOffice.com.