Achieving unicorn status—a valuation exceeding $1 billion—is the ultimate dream for any startup.
It signifies rapid growth, market dominance, and a promising future.
However, as exciting as this milestone is, there’s an important asset many unicorns overlook—Importance of Intellectual Property Rights for Startups.
With over 1,000 unicorns globally and more than 600 in the U.S. alone, you might be surprised to learn that around 30% of these unicorns don’t even hold a single patent.
This isn’t just a minor oversight.
It’s a serious IPR gap that could eventually hurt their long-term prospects.
While many unicorns are focused on expanding their market share and scaling at breakneck speed, few are prioritizing the protection of their core innovations.
This leaves them vulnerable to costly litigation, licensing deals, and competitive threats.
In fact, nearly 60% of unicorns without a solid IP strategy end up facing legal battles or licensing challenges within a few years of achieving their unicorn status (Source: IAM Media, 2023).
Unicorns in software, which make up over 65% of this elite group, are particularly prone to this risk.
They may be more focused on user growth and market dominance rather than securing patents, but this reliance on speed over protection could prove costly.
It’s crucial for these companies to realize that while scaling fast is important, ensuring a strong IP foundation is just as critical to their long-term survival.
As the competition heats up, unicorns that fail to establish a solid IP strategy risk losing their competitive edge, potentially jeopardizing their valuation and future growth.
A strong IP strategy doesn’t just protect your inventions—it can become a key differentiator, enabling your unicorn to continue to lead in an increasingly crowded marketplace.
So, are you building your unicorn on a solid foundation, or are you skipping over an essential asset that could safeguard your success for years to come?
Let’s explore why a robust IP strategy is no longer optional for unicorns that want to stay on top.
Why Should Unicorns Be Alarmed by the Innovation Gap?
The misconception is that innovation gap is directly proportional to the number of patents a company holds. But it is so much more. It is about the strategic value that IP brings for a company. It becomes the startup facilitator.
But it is often overlooked by fast-growing unicorns. This leaves their business vulnerable to:
- missed opportunities,
- potential legal threats,
- lost competitive advantages.
Here’s why unicorns should start building an innovation strategy and culture early.
Importance of intellectual property rights for startups:
#1 Protecting and Leveraging Innovation from the Start
In the early stages, many unicorns focus purely on execution—building the product, capturing market share, and growing the user base. Ensure that critical innovations are identified, documented, and protected before competitors or patent trolls have a chance to replicate them.
#2 Fostering a Culture of Innovation
To truly scale sustainably, unicorns need a culture that encourages innovation at every level. When employees are empowered to submit ideas and inventions, it creates a ripple effect that feeds into your IP strategy. Employees often create breakthrough innovations. It can be a new feature, an algorithm, or a process improvement. So, if there’s no infrastructure to capture those ideas, you may lose them.
#3 Staying Ahead of Competitors with IP Protection
In industries where the pace of technological change is rapid (like software, AI, or e-commerce), competitors are constantly innovating. If your unicorn doesn’t prioritize its IP from day one, a competitor could easily leapfrog you, not by innovating faster but by protecting their ideas first.
Related Read: How Did Innovation Management Enable a Global Consumer Products Company to Increase Invention Disclosures by 445%?
#4 Strengthening Investor Confidence
An integral part of long-term growth is having a well-managed IP portfolio. Investors want to know that the company has not only a solid product but also a strategy to protect and defend its core innovations. Without this, investors might see your unicorn as exposed to competition or legal risks.
#5 Reducing Future Legal Risks
Whether it’s a patent infringement lawsuit or being blindsided by a competitor’s IP claims, a reactive approach can be devastating. The earlier you integrate invention disclosure and IP management, the sooner you can identify potential issues and address them proactively.
#6 Maximizing Strategic Partnerships
Unicorns often seek strategic partnerships, acquisitions, or even IPOs to fuel further growth. A key part of these deals is the intellectual property portfolio. When you have a strong IP position, you can leverage it to secure favorable terms in negotiations, attract potential acquirers, or gain traction in the market.
Why Unicorns Delay Their IP Strategy?
As unicorns scale quickly and race toward market leadership, revenue, user acquisition, and product development naturally holds their attention.
Importance of Intellectual Property Rights for startups tends to fall lower on the priority list.
Founders may feel that securing patents and managing an IP portfolio is a luxury reserved for later in the company’s lifecycle.
But this delay in implementing an innovation strategy could come back to haunt them when they hit new growth stages, enter competitive markets, or face legal battles.
A key reason why unicorns hesitate is a lack of resources.
With limited time and energy, the focus is often on what drives the company forward—growth.
Then there’s the misconception that IP is expensive and complex to manage.
Many unicorns are in industries like software, e-commerce, and consumer internet, where the immediate focus is on capturing market share and building user bases, rather than securing IP.
In reality, starting early with small, strategic filings can build a solid IP foundation without draining resources.
By taking incremental steps, startups can avoid the heavy financial and legal burdens that come with neglecting IP in the long run.
Think of companies like Uber and Airbnb.
These disruptors didn’t need a large patent portfolio to upend entire industries. They capitalized on first-mover advantages and leveraged their market dominance.
Here’s another twist.
Many unicorns plan to exit through IPOs or acquisitions.
When this happens, a weak IP portfolio can significantly devalue the company or open the door to patent infringement lawsuits.
So, while it’s easy to see why many unicorns delay their IP strategy, “We’re too busy scaling,” “It’s too expensive and complicated,” or “Is IP really that valuable?”
These reasons are becoming outdated. Managing IP is no longer the daunting task it used to be.
With tools like AI-powered innovation lifecycle management, prior art searches, and automatic portfolio management, unicorns can streamline the process, reduce costs, and still protect their innovations.
IP cannot just be an afterthought!
Ways to Expand Your Overall Innovation Strategy
Way #1 Evaluate Your Current IP Position
Why do you think 80% of billion-dollar startups lack patent protection? (Parola Analytics, 2023)
Are they not aware that they’re one lawsuit away from losing everything?
Anything good starts by first finding where the gap is. So, you start by assessing your current portfolio.
Are there any gaps in your patent filings? Are your competitors ahead of you in terms of protecting key innovations?
This self-assessment is the first step in identifying where you need to improve.
Way #2 Build an Innovation Strategy Early
Building on previous stances, you must not treat patents as an afterthought.
Integrate building innovation and IP protection from Day 1.
Anyway companies with strong IP strategies raise more funding. So you should have one naturally.
In fact, startups with patents are 55% more likely to secure VC funding and receive 36% higher valuations than those without. (HBR, 2022)
Start by asking yourself:
- Is my innovation strategy reactive (only filing when necessary) or proactive (integrated into product development)?
- Have I considered how my IP portfolio could increase my company’s valuation?
- Do I have a strategy to protect upcoming innovations before they’re publicly disclosed?
Way #3 Invention Disclosure & Protection
The best innovators don’t just “come up with ideas,” they capture, track, and protect them before competitors do.
This is why you must encourage your teams to consistently capture ideas and disclose inventions.
Ask yourself:
- Do I have a structured process for documenting new ideas across teams?
- How many ideas have been lost simply because they weren’t recorded?
- Do I have a tool in place to track inventions from ideation to patent filing?
And then: Use an invention disclosure management system to track ideas from conception to disclosure and filing.
Way #4 Innovation Challenges & Internal Collaboration
Ideas can come from anywhere and from unexpected places. It is overstated yet completely true.
Customer support teams, sales, HR, intern, leader, literally anyone and from anywhere.
Heard of Airbnb’s game-changing Experiences feature?
It started as an idea from an operations team member.
Basically, foster a culture where innovation isn’t just the responsibility of R&D but everyone’s role.
As your action step: Launch company-wide innovation challenges and invite employees from all departments to submit ideas.
The more ideas you collect, the higher your chances of finding the next billion-dollar breakthrough.
Way #5 Use AI-Powered IP Tools
Patents used to take months of legal work. Now, responsible AI tools can draft applications, conduct prior art searches, and streamline filings in days.
Ask yourself:
- Am I still relying on manual patent searches, or have I explored AI-powered tools?
- Could AI help my team reduce time spent on IP filings and disclosures?
- Am I using technology to stay ahead of competitors in patent filings?
Leverage AI-powered prior art search engines (PQAI) to check if an idea is novel before spending money on a patent. Use Inventor Assistant to brainstorm with team or individually.
Way #6 Work with IP Experts
Surround yourself with experienced innovation managers, consultants, professional tools, CIOs, patent attorneys, and IP strategists who understand your industry.
They can help you identify opportunities for filing patents and guide you through the process efficiently.
They will help you create a proactive filing strategy instead of waiting for competitors to make their moves first.
Related Read: Best Practices for Chief Innovation Officers
Way #7 Think Beyond Patents
Importance of intellectual property rights for startups and IP strategy isn’t just about patents.
Trademarks, copyrights, and trade secrets also play important roles in protecting your brand and ideas. Make sure you have a comprehensive strategy that covers all bases.
Related Read: The Untold Value of Trade Secrets in Innovation
Way #8 Leverage Your IP for Revenue
Consider licensing your IP to generate additional revenue streams or use it as leverage in negotiations with partners or investors.
Your IP Is a Business Asset—Use It to Grow Revenue
Most startups see patents as just “legal protection.” But smart companies turn their IP into a revenue stream.
- Qualcomm makes billions licensing its 5G patents—instead of just using them internally.
- IBM generates over $1 billion per year from patent licensing alone.
- Tesla shares some of its patents strategically to control industry standards (while keeping its core tech proprietary).
So, explore licensing deals, joint ventures, and patent monetization strategies to turn your IP into a competitive advantage.
Lastly: Are You in “Founder Mode”?
Here’s the question every unicorn founder should ask!
Are you still in “founder mode,” focusing solely on growth and product-market fit?
Or are you ready to step into “IP strategist mode” to secure your long-term market dominance?
In the early days, it’s easy to get caught up in scaling, hiring, and capturing market share. But at some point, survival isn’t just about moving fast—it’s about protecting what makes you unique.
The real question: Is your unicorn built for the long game, or are you leaving the door open for competitors to catch up? Your IP strategy might be the difference between a fleeting success and an industry-defining powerhouse. Learn the importance of intellectual property rights for startups and set up ways to ace it.
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