For start-ups and growing companies, the decision to patent can feel like a costly gamble. While the upfront expense and litigation risk are real, IP can meaningfully influence valuation—especially during acquisition or investment discussions. A strategic approach helps ensure your portfolio supports business outcomes, not just protection.
Patents: A Strategic Decision, Not Just a Legal One
For early-stage and growing companies, decisions about intellectual property are rarely just legal, they’re strategic. We often see leaders weighing immediate costs against long-term value, particularly when capital, time, and internal expertise are limited. Few decisions capture this tension more clearly than whether to invest in patent protection.
And for good reason; It can cost $15,000 – $20,000 to secure a patent. Not to mention that patent litigation is an expensive game, so it’s unlikely that a start-up could even afford to defend itself should someone infringe its patent. This is especially true if the infringer is a big company with deep pockets.
Today, these costs can vary widely depending on jurisdiction, technology complexity, and whether global protection is required. For many organizations, the real challenge isn’t simply the price tag, it's determining whether the investment meaningfully supports the business’s long-term objectives.
The Acquisition Lens: Why Big Companies Care
But before you dismiss the idea completely, think about another scenario involving a big company.
Let’s say a big company comes across a start-up and likes its technology enough to consider acquiring the smaller firm. The larger company will place a higher value on the technology, and hence the start-up company itself, if it is protected by patents. That’s because the acquiring company has the financial resources to prevent others from using the technology by pursuing litigation to defend these patents if necessary.
In today’s acquisition environment, buyers are not just asking whether patents exist. They’re looking for evidence that the IP is relevant to the product, defensible, and aligned to the market opportunity. A smaller portfolio with clear strategic fit can be more compelling than a larger IP portfolio that doesn’t map cleanly to revenue, product differentiation, or future growth.
The Brokered Market: Evidence That Patents Carry Real Value
And maybe even more importantly: there is a real secondary market for patents and it is becoming increasingly data-driven. In IAM’s The Brokered Patent Market (tracking the 2021 market year), the average asking price was about $208,000 per US-issued patent and $330,000 per patent family (with deals often negotiated from those starting points). IAM also estimates the 2021 brokered market size at $166 million, reinforcing that patents aren’t just “paper”, they can be priced, packaged, and transacted as business assets.
Of course, asking price isn’t the same as closing price, and not every patent (or package) sells. But that’s part of the point for start-ups: value isn’t created simply by filing an application, it’s created by making your IP understandable and useful to the buyer or investor evaluating it. Within that context, you can see how patents can contribute to the valuation of a start-up.
The Real Question for Start-ups
So when a small start-up is agonizing over whether to patent a technology, it should recognize that this decision can influence the overall valuation of the company in the event of an acquisition.
The real question isn’t simply whether to patent. It’s why this IP matters, what business value it protects or enables, and how it will stand up in diligence when a strategic buyer, partner, or investor starts asking hard questions. In other words, the market consistently rewards IP that is easier to diligence, easier to justify internally, and easier to tie to real-world value.
Connecting IP to Enterprise Value
This is where a structured evaluation can help. A structured and external assessment of an IP Portfolio can help organizations understand how their intellectual property supports valuation, funding conversations, and long-term strategy, so you can invest with intent, and avoid spending on IP that doesn’t move the business forward.
Although that patent may not seem to be the most attractive way to spend money now, remember that value is in the eye of the beholder!
If you’re evaluating whether your IP investments are building enterprise value, or simply adding cost, Stratford’s IP Portfolio Impact Assessment helps organizations connect intellectual property to valuation, acquisition readiness, and long-term strategy. Book a meeting with one of our IP experts to see how we can help you chart a strategic path forward.
For Canadian start-ups, we also help identify, evaluate, and apply for available funding programs that can support IP development and protection. By aligning IP strategy with funding opportunities, organizations can stretch limited IP budgets and make more deliberate, value-driven investment decisions.
You Might Also Be Interested In: Know the Money Funding Guide
This article was originally published in 2013. It has been updated with new references and information.