How to tell your IP story to venture capitalists

Intellectual property strategy can prove to VCs that your company has a unique edge to dominate the market – but there is an art to communicating your IP value to investors, writes Matthew Wahlrab

Timing market entry is for venture capitalists what location is to real estate investors.

VCs understand that an investable market helps overcome a foundational source for failure for a startup business: true product-market fit. Surprising your audience with an opportunity no one else has seen is a surefire way of grabbing your audience’s attention. Once you have their attention, presenting your intellectual property makes the opportunity real and shows your unique ability to establish a dominant market share position.

Making the case for timing

What do investors care about? Timing. Telling the story of true product-market fit is the difference between funding and growth and a slow decline.

True product-market fit, a key indicator of timing, exhibits attributes that make recognising timing easier to identify. These attributes include quantifiable customer acquisition costs, high customer retention and increasing market demand. Everyone wants a VC to open their chequebook and close the investment round enthusiastically. Delivering insights no one else realises unlocks VC interest and funding.

Is this a market worth investing in?
A compelling narrative includes information on a rapidly growing addressable market today, and often a path to a much larger market tomorrow. For example, Amazon began selling books online, with a path to the larger e-commerce space.
Is this market winnable? For example, is a 51% or greater market share attainable?
Demonstrating a market is winnable is worthy of its own standalone article. Presentations that underscore rapid growth opportunities, large revenues, healthy gross margins and vulnerabilities in incumbents are a few examples of building a case for your business against incumbents. For example, Google Chrome exploited vulnerabilities in incumbent browsers like Netscape, Explorer and Firefox as a late market entrant to become the dominant market share owner against a backdrop of well-funded incumbents. Blockbuster’s $1 billion stock buyback from Viacomm in 2004 left the company financially constrained and unable to raise debt to diversify into the digital delivery space, leaving the door open for new players like Netflix to emerge.
Is now the time to win the market?
Product development timing, sales cycles, payment of invoices and the materialisation of market demand are easy to underestimate. Once a business is funded, delays in a market materialise and slowly bleed a company’s cash. Timing is critical. Ways of underscoring that NOW is the time to invest in pursuing a market often include changes in consumer behaviours, a rapidly evolving technology stack in the addressable market and fast customer fluency with the solution. Apple’s launch of the iPod exploited a change in consumer behaviour. Technical improvements to the iStore, adapting the iPod with Wi-Fi and ultimately a cellular antenna allowed Apple to grow multiple sizeable markets on its way to capitalising on growth in the cellular phone market space. Like the story of the iPhone emerging from humble beginnings, 10 years from now, the progression of your technology will be obvious. Your challenge is to tell the story today.

Often, demographic trends, changes in user behaviour, and the presence of new technology in an existing value chain create cracks in an incumbent player’s market position. When these trends are paired with additional factors, for example, competition going all-in with an inferior technical solution, the path for disruption begins to emerge. Unsurprisingly, intellectual property plays a role in underscoring the opportunity and the case for your business’s staying power.

Communicating a compelling narrative

Intellectual property ownership and data around IP – licensing benchmarks like terms and royalty rates, tax treatment on revenues and patent filing patterns – provide quantitative information to make the case for investing in a market and, ultimately, your business. Telling a compelling story includes at least:

making the case for timing; and
laying the strategic framework for why your business has staying power.

Execution is a common buzzword amongst entrepreneurs and businesses alike. While IP practitioners often discuss the need to connect IP strategy to business imperatives, we can examine the role of IP as an indicator of timing and traction through the lenses of:

Demand validation;
Adoption indicators; and
Near-term execution.

Finally, we can explore presenting the company’s intellectual property as a key enabler and reinforcing tool in support of corporate strategy.

The case for timing

IP is not just a legal asset but a strategic business tool that can provide insight into market dynamics, competitive positioning, and operational readiness. This approach can help entrepreneurs and businesses alike understand the strategic value of IP in making informed decisions about timing market entry. Giving examples of the three lenses — demand validation, adoption indicators and near-term execution — and explaining how intellectual property is used will help a business craft a compelling narrative. Trade secrets, trademarks and design and utility patents help corroborate market timing and the applicability of your solution to this unique investment opportunity.

Demand validation

While demand validation data may be inferred from market intelligence, customer acquisition cost trends, voice of customer responses, and subscriptions or followers to the company community, other indicators can also be used to underscore a genuine and sizeable market need that exists for your solution now. Confirming this is imperative to warrant VC investment. Categories you can use to brainstorm ways of validating demand include:

User behaviour – dissecting how users evaluate, purchase, and interact with your solution creates opportunities for competitive advantage to outmanoeuvre competitors.
Competing products – competitive intelligence on products or services in the market competing for market share.
Consortium building – the presence of industry players creating formal relationships and forums aimed at addressing pain points addressed by your solution is useful in identifying partners as well as customers.
Regulations – whether new regulations are put in place or long-felt but unmet industry needs exist, regulations create near and long-term demand for new solutions that may not otherwise find product-market fit.

In each of these categories, existing and planned company-held IP and IP data can be leveraged to identify market timing opportunities and validate product-market fit. Table 1 includes strategies that can be used to match common IP assets to demand validation indicators.

By aligning IP assets with these demand validation indicators, companies can not only anticipate market needs but also shape them, securing a strategic position that appeals to venture capitalists and other investors looking for confident market entry and potential dominance.

Table 1: Strategies to map IP to demand validation indicators

No.	Category	Factor	Trade secrets	Trademarks	Design patents	Utility patents
1	Demand validation	User behavior	Possession of an understanding of pain points held within company systems for maintaining customer data privacy and sensitive information.	An increase in trademark class filings relevant to the proposed solution can be used to identify market entrants as well as infer investment by others to deliver a solution in the space.	Registration of rights around ornamental features, in particular an increase in filing activity may indicate investment in branded solutions to address market needs.	An analysis of claim coverage of competing solutions paired with an assessment of technical deficiencies underscores opportunities for new solutions and competitive advantage.
2	Demand validation	Competing products	Combine insights from company trade secrets with knowledge of competing products to identify gaps where customer demand may be present. Validate with market testing.	Monitoring for registrants, filing numbers, geographies and sentiment analysis tools that track brand awareness. This monitoring all supports the case for market demand, especially in business-to-consumer offerings.	The ornamental features of registered design patents provide information on competitor awareness for consumer appetite for high-end, economy and value-based efforts to commercialise physical products.	Early patent filings are often followed by periods of filing inactivity. Monitoring a sudden increase in filings three to eight years after early initial filings often indicates market factors have evolved enough to support new solutions.
3	Demand validation	Consortium building	Trade secrets within consortiums may be necessary to drive standards. Plans to transition trade secrets to other forms of intellectual property maintain a competitive edge.	Build awareness in consortium branding efforts to enhance visibility and credibility, ultimately driving user demand for solutions that are endorsed by the consortium.	Collaborate on design patents within the consortium to establish common aesthetic or functional standards, which can become synonymous with quality and reliability in consumers’ minds.	Contribute utility patents to enable consortium-driven solutions that align with industry trends, leveraging collective innovation to meet market demands more effectively while driving licensing revenue. Be cognisant of potential obligations when contributing to standards bodies.
4	Demand validation	Regulations	Adapt proprietary processes to meet new regulatory requirements, creating solutions that not only comply with the latest standards but also offer competitive advantages.	Develop and trademark solutions or sub-brands to associate your solution with compliance and excellence in regulated markets. Trademarks play an important role in marketing and brand awareness, and should be developed internally while competitors should be monitored.	Visually tying the ornamental features of your solution with regulation requirements will create a unique selling point for your solution.	Utility patents for innovative technologies or processes that meet or exceed new regulatory standards adds a layer of customer lock-in, demonstrating foresight and leadership in anticipating and addressing regulatory impacts on the market.

Adoption indicators

Adoption indicators serve as crucial metrics to gauge the readiness of the market and the likelihood that a product will be embraced by consumers and integrated into existing systems. They represent the second stage in the lifecycle of a product’s journey to market dominance. In this stage, businesses must assess how well their solutions are being accepted and what aspects may influence increased adoption rates. Categories of adoption indicators include:

Existing technical stack - understanding and integrating with the current technological infrastructure that customers already use is fundamental. Entrepreneurs often underestimate how current technologies or the lack of enabling technologies increase adoption friction in the market. Demonstrating that your solution not only fits within the existing technical stack but also addresses discovered paint points is a strong indicator of solution adoption.
User knowledge – investors often lament the challenge of educating a market. The level of knowledge users need to possess to use your solution effectively must be understood. While demographic information pointing to an increase in technical skills necessary to use your solution is one way of establishing knowledge, documented IP to support customer onboarding and retention is key for reducing adoption friction in the broader market.
Solution features - the technical aspects of your solution that resolve customer pain points are powerful motivators for adoption. Features that clearly demonstrate an understanding of customer needs and that deliver tangible benefits can confirm the market demand for the solution. Intellectual property, like patents, technically discloses proprietary features that competitors cannot easily replicate.
Adoption funding – government grants, industry or solution-specific funding, and tax credits all reduce the friction of adoption by lowering switching costs from incumbent solutions.
Fast-track regulatory regimes – in many industries, expedited regulatory approval for specific solutions exists. For example, in pharma, the designation of Orphan Drug Status or an existing and comparable 510(k) cleared device.
Reimbursement regimes – in the life sciences space, for example, medical devices and pharma, having existing reimbursement codes is a crucial factor for securing funding for new solutions in the space.

Table 2: Strategies to map IP to adoption indicators

No.	Category	Factor	Trade secrets	Trademarks	Design patents	Utility patents
1	Adoption indicators	Existing technical stack	Bring secret know-how to bear to integrate your solution with technology present in the value chain. Establish the need and your unique company know-how that creates an advantage that competitors will lack.	Contracts for the use of your trademark in a partner product (e.g., Intel Inside) or vice versa indicates a belief by an external party in the market demand for your solution.	Matching the ornamental features of your product with primary market intelligence revealing user preferences underscores the potential for product-market fit.	Patents that protect methods and systems for integrating into existing technology highlight areas where demand may exist. Licensing patent-protected products covering methods of how people use your solution in their daily activities corroborates user demand.
2	Adoption indicators	User knowledge	User interfaces such as on-screen tutorials and help buttons, usage information, designs, and educational materials minimise new user frustration while bolstering retention.	Branding certifications in a trademark programme to demonstrate a user's level of proficiency using your technology can "gamify" the learning experience, providing a marketable incentive to master your solution.	Patent the ornamental aspects of an intuitive design and interface to foster the "discoverability" of your solution as part of a branded learning experience.	Protect educational methods and onboarding processes that foster user understanding and engagement with your solution. Licensing these platforms to universities and channel partners also creates partner lock-in and a population of future skilled practitioners of your solutions.
3	Adoption indicators	Solution features	Guard the proprietary features and algorithms that drive the unique value proposition of your solution, ensuring they remain exclusive to your offering.	Brand the unique features of your solution with trademarks, helping them stand out in the market and become easily identifiable.	Patent distinctive product designs that are essential to the functionality and appeal of your solution, linking form and function to user needs.	Protect the innovative features of your solution that solve user pain points, reinforcing the uniqueness and desirability of your product.
4	Adoption indicators	Adoption funding	Maintain as confidential the strategies for securing and utilising adoption funding, including insights into navigating the grant application process effectively.	Use trademarks to establish your solutions as eligible or preferred recipients for specific funding opportunities.	Utilise design patents to differentiate your product, making it more attractive for funding that targets innovative designs in the market.	Highlight utility patents in funding applications to emphasise the novelty and potential impact of your solution, improving chances of funding approval.
5	Adoption indicators	Fast-track regulatory regimes	Keep trade secrets on proprietary regulatory strategies and correspondence that have successfully navigated fast-track approval processes.	Brand certain products with marks that indicate their expedited regulatory status, if allowed, to build trust and encourage adoption.	Secure design patents for products specifically modified to meet fast-track regulatory guidelines, ensuring a protected market position.	Use utility patents to emphasise the innovative and significant beneficial aspects of your solution that qualify it for fast-track regulatory approval.
6	Adoption indicators	Reimbursement regimes	Protect proprietary pricing models and reimbursement strategies that enable your solution to fit into existing reimbursement frameworks.	Trademark terms related to the cost-effectiveness or reimbursement eligibility of your solution, making it more attractive to buyers who require reimbursement.	Design patents can cover the particular configuration of your product that may be required for reimbursement, securing your niche in the market.	Ensure that utility patents cover aspects of your solution that align with reimbursement criteria, aiding in the argument for coverage under existing reimbursement regimes.

In each of these categories, company-held IP and IP data can be a significant source of insight. Understanding these indicators can help businesses strategise on how to leverage their IP for the best chance of market adoption, creating a formidable argument for investment in their solutions.

Near-term execution

Near-term execution focuses on the practical aspects of bringing a product to a market in need of your solution. As investors typically fund 12 to 24 months of operations, the near-term execution strategy examines how your company seeks to launch and scale operations. In establishing near-term goals and factors that favour the adoption of your solution, near-term execution strategies support investors in understanding the market opportunity and your immediate priorities. Categories of near-term execution include:

Supply chains – relationships, contracts, resources and production related to the manufacture or development of your solution.
Business models – details of how the sale of your solution generates a defensible position for your business.
Distribution channels – relationships and contracts used in the marketing, sale, and delivery of your solution.
User usage data – information related to how your customer interacts with your solution and the broader technology stack. These insights often create competitive advantages in creating new features and solutions that fit within the broader growth strategy.
Freedom to operate – ensuring that the company has the freedom to operate without infringing on the IP rights of others is crucial. A thorough IP landscape analysis can identify potential legal hurdles, paving the way for a smoother execution.
IP protection strategy – a robust IP strategy that protects core technologies and product designs can safeguard a company’s market position and enable aggressive market penetration strategies.

By aligning IP assets with these near-term priorities, companies can address how investment capital will be deployed to win the identified market opportunity. While execution is key, those entrepreneurs with fluency in IP will see how IP assets add weight to signed agreements, protect innovation investment, build brand awareness, and fortify mutually beneficial relationships with partners and customers alike.

Each business and market opportunity presents a unique chance to mix and match tools for identifying, validating, and realising a well-timed market entry. Once the themes unique to making the case for your business have been identified, it is now time to tell the story.

Telling investors the story

Not even investors are immune to being drawn in by a good story. Telling a compelling investment story requires weaving together a narrative that showcases not only the strength of your business concept and the robustness of your intellectual property strategy but also how these elements fit the larger market opportunity in the present moment. Below is an outline to support your business narrative through the lens of IP. By following the principles of the outline, you will manage to present a narrative that resonates with investors, highlighting the potential for product-market fit and the timing for market disruption:

Setting the stage: the value chain
- Begin by providing an overview of the current value chain within which your solution exists. Highlight the pain points and inefficiencies your solution addresses.
- Map out the stakeholders, processes and economics, and show where your solution fits and adds value.
- Do not be afraid to embrace IP-based data and analytics to provide an alternative perspective on how you have identified and are timing entry into an investable market.
Introducing the protagonist: your solution
- Introduce your solution as the protagonist in this story, detailing its journey from conception to market entry.
- Emphasise unique solution features, how they satisfy market demand and why now is the right time for this innovation.
- Reinforce your messaging with IP data where possible to denote the need and underscore how the merits of your solution fit within your IP portfolio. Use images of the technical components of your solution visually mapped to areas where trade secrets, trademarks, patents and copyrights protect your business interests and relationships.
Drama and conflict: market friction and disruption potential
- Identify market friction points that stymy adoption of competing products that your solution overcomes, such as outdated technologies, inefficient processes or unmet consumer needs.
- Discuss the potential for disruption your solution represents, supported by your IP, that challenges the status quo and offers a marketing-winning alternative.
Rising action: leveraging intellectual property
- Explain how each technical component of your solution fits within your IP strategy, providing a moat against competition. Highlighting how your IP strategy creates added expenses the competition needs to contend with will reinforce the idea of the competitive moat. Similarly, leveraging method patents in manufacturing partnerships increases competitor cost-of-goods-sold shrinking the margin of error from which competitors compete.
- Discuss the strategic deployment of trade secrets, trademarks, design patents, and utility patents throughout the value chain, from manufacturing to distribution.
Climax: onboarding and customer retention
- Describe the onboarding process for customers, illustrating how your IP strategy enhances user experience and adoption.
- Detail your plans for customer retention and how your IP portfolio supports long-term customer relationships and brand loyalty.
Falling action: the IP due diligence folder
- Introduce a due diligence folder titled ‘IP’, meticulously organised to demonstrate your strategic IP management.
- Show how this folder contains the blueprints of your competitive edge and is a testament to your investment readiness.
Conclusion: the investment ask
- Culminate your story with a clear and direct investment ask, explaining how the funds will be used to capitalise on the identified market opportunity.
- Reaffirm the alignment of your IP assets with near-term priorities and how this positions your company for success.
Encore: forward-looking vision
- Offer a glimpse into the future, depicting a vision of the market with your solution at the forefront, bolstered by a growing and protective IP portfolio.
- Leave investors with a clear picture of the potential for scalability, market leadership, and high returns on investment.

Table 3: Strategies to map IP to near-term execution

No.	Category	Factor	Description	Trade secrets	Trademarks	Design patents	Utility patents
1	Near-term execution	Supply chains	Relationships, contracts, resources, and production related to the manufacture or development of your solution.	Protect proprietary supplier relationships, manufacturing processes, or logistics optimisations that give you a competitive edge in producing and delivering your solution efficiently.	Use trademarks to secure branding partnerships in the supply chain, enhancing product traceability and brand strength.	Patent designs play an integral role in creating a basis for guarding against the production, import, and export of manufactured goods.	Protect patented technologies that may be involved in the supply chain process, ensuring exclusivity and potential licensing opportunities.
2	Near-term execution	Business models	Details of how the sale of your solution generates a defensible position for your business.	Keep the finer details of your unique business model confidential, including pricing strategies and cost structures that give you an edge in the market.	Brand your business model and sales propositions to distinguish your offerings, ensuring that customers associate your trademarks with your unique value proposition.	Secure design patents that are a part of your business model or support it, especially if it includes innovative product packaging or presentation that adds to the user experience.	Patent innovative business methods or systems that underpin your business model, such as a unique subscription service or a novel advertising approach.
3	Near-term execution	Distribution channels	Relationships and contracts used in the marketing, sale, and delivery of your solution.	Maintain the confidentiality of strategic channel partner agreements and distribution methods that provide a competitive advantage in reaching your market.	Utilise trademarks to establish trust and recognisability in your distribution network, making your product more attractive to distributors and retailers.	Use design patents to ensure exclusive design features that make your products appealing in your channels of distribution, such as specialised display units or packaging.	Protect any unique methods or apparatuses related to the distribution of your products that could give you a logistical advantage. Licensing vendors to assembly techniques ensures knowledge gained in manufacturing and producing your solution does not benefit competitors.
4	Near-term execution	User usage data	Information related to how your customer interacts with your solution and the broader technology stack. These insights often create competitive advantages in creating new features and solutions that fit within the broader growth strategy.	Consider usage patterns and customer feedback as trade secrets to refine your product innovation plan, ensuring that these valuable insights turn into new revenue streams.	Monitor trademark mentions in user feedback and usage data to guide marketing strategies and product development.	Apply design patents to any new product features or improvements that arise from user data analysis, maintaining the exclusivity of your user-driven innovations.	Patent novel uses of your product discovered through user data analysis, which can open up the early majority of your market.
5	Near-term execution	Freedom to operate (FTO)	It's crucial to ensure that the company has the FTO without infringing on the IP rights of others. A thorough IP landscape analysis can identify potential legal hurdles, paving the way for a smoother execution.	Regular trade secret analyses through patent, market, and technical publications monitor for escape and possible parallel development and disclosure of your trade secrets.	Ensure your trademarks are clear of potential infringements to avoid disputes that could interfere with market entry and re-branding as you scale into the market.	Conduct FTO searches to make sure your design patents are unique and do not infringe on existing patents, securing your FTO. When appropriate, work with legal counsel to confirm your own products have FTO.	Use utility patents defensively to prevent competitors from blocking your market entry or to clear the path for your product's deployment. When appropriate, work with legal counsel to confirm your solutions have FTO.
6	Near-term execution	IP protection strategy	A robust IP strategy that protects core technologies and product designs can safeguard a company's market position and enable aggressive market penetration strategies.	Develop a comprehensive trade secret policy to protect vital IP that may not be patentable but is crucial for maintaining a competitive market position.	Implement a strategy for trademarking key product names, services and slogans to support brand identity and market penetration.	Integrate design patents into your IP protection strategy to cover the unique ornamental features of your product to build brand awareness and product loyalty.	Construct a utility patent portfolio that covers core technologies and innovations, which serves as a deterrent to competitors and establishes a stronghold with partners and customers.

Remember, the goal of the story is to not only inform but also engage and inspire investors. In your narrative, make it clear that your IP is not just a legal formality; it is the foundation of your strategy, a significant asset that differentiates your solution and provides a foundation for growth. This narrative will not only validate your business model but also the expertise and foresight of the entrepreneurial team, ultimately fostering confidence in your ultimate success.