Patent due diligence checklist: 6 things investors expect to see

For startups and mid-sized companies, patents are often core to valuation and funding. In Europe, for example, startups that hold both patents and trademarks are 10x more likely to successfully attract early-stage funding.

But vague assurances like “patent pending” or “we filed a provisional” won’t hold up under scrutiny. Investors (and their counsel) want to see a clear, coherent patent strategy. Are the pending claims patentable? Are the granted claims enforceable? Have all patents and patent applications been properly assigned to the company? Are any employees or contractors missing from the inventor list? Has the company filed continuations to extend coverage, or is the portfolio stagnant?

Whether you’re preparing for your next funding round or proactively strengthening your patent portfolio, this guide breaks down exactly what investors expect to see during patent due diligence — and how to avoid the red flags that slow deals down or kill them entirely.

1. Patent coverage tied to how the company creates value

Investors don’t just want to see that you have patents; instead, they want to see that those patents actually matter. A granted patent on a legacy prototype, internal tool, or side-feature no longer in production won’t move the needle, and in some cases, it can signal a lack of strategic focus.

During patent due diligence, expect questions like:

• Does this patent protect a core technical differentiator that underpins revenue or competitive advantage?
• Is this invention still in use, or has the company pivoted?
• Could a competitor build a functionally similar product by designing around your claims?

What to prepare: An investor-ready summary that clearly shows how your patent portfolio supports your commercial strategy. That might include:

• A claim-to-product map showing which key features are protected.
• A short narrative explaining how your patents defend your whole product or service (e.g., by bottlenecking a key technology that underpins the product or providing exclusivity over a key feature that customers love).
• A timeline of how your IP strategy has evolved alongside product development.

2. Applications are built to withstand prosecution

Even if a patent covers the right technology, investors will evaluate how it’s claimed and whether those claims are properly supported, especially for pending applications. With no granted claims yet, they’ll try to forecast whether the application is likely to be allowed and, if so, how valuable the resulting patent will be.

Common diligence questions include:

• Are the claims drafted at a level of breadth that actually blocks competitors? If claims are tied to a specific implementation or configuration, they’re easy to design around. Investors look for claim breadth that establishes a meaningful “moat.”
• Is the specification deep enough to support fallback positions? In prosecution, claims may need to be narrowed. But if the spec only describes one embodiment or lacks alternative phrasing, you may not be able to amend. That limits your ability to negotiate scope with the examiner and reduces the probability that you’ll achieve a granted patent.
• Was the claim strategy proactive or reactive? Investors and their counsel will look for signs that the claims were written with a strategy in mind: dependent claims that explore valuable variations with corresponding support in the specification, and preemptive mitigation of §101 (subject matter eligibility) or §112 (clarity, enablement) risks.
• Does the language reflect real enforceability? Terms like “real-time,” “intelligent,” or “automated” with no technical clarification may get past a novice, but not experienced counsel. Overly long or jargon-filled claims can signal rushed filings or non-specialist drafting that will likely fall apart under scrutiny.

What to prepare: For granted patents, be ready to speak to enforceability, especially if you're asserting them as a core asset.

3. A portfolio structured for leverage and longevity

Do you have control over scope, timing, and geography as the business evolves? A single granted patent with no continuation strategy, no global protection, and no plan for future filings signals a static portfolio with limited flexibility.

Key things potential investors will review include:

• Continuations and divisionals: Have you kept key patent families alive to preserve optionality? A continuation allows you to revisit claim scope later, whether in response to a competitor, new product direction, or licensing opportunity. A granted patent with no follow-on filings is a closed door.
• PCT and national stage strategy: If you filed a PCT, did you follow through with national stage entry in markets that matter to your growth, exit, or enforcement strategy (e.g., US, EU, China)? Dropping key jurisdictions with no explanation can raise red flags.
• Strategic provisionals: Investors will look at how you transitioned from provisional to non-provisional. Are the final claims supported by the provisional disclosure? What material was added between provisional and non-provisional filings?
• Filing cadence as a signal of innovation: Investors may expect to see multiple filings over time, not just to cover new inventions, but to create a narrative of ongoing innovation and claim expansion.

What to prepare: A visual family tree or docket report showing how filings link together (e.g., continuations, divisionals, CIPs), jurisdictional rationale for foreign filings, and notes on how you’ve used continuations or filing cadence to preserve optionality or signal innovation.

4. Proper ownership and inventorship documentation

Ownership issues are one of the most common deal-killers in IP diligence, and they’re often avoidable. Investors will check that:

• All listed inventors are correct based on their contribution to the claims, not just who worked on the product.
• Every patent and application has been formally assigned to the company, with assignments recorded at the USPTO (and foreign offices, if applicable).
• No IP was created under prior employment, in a university lab, or by contractors without a signed IP assignment.

This is low-hanging fruit for legal teams, and any sloppiness here raises questions about how well the rest of your operations are run.

What to prepare: Documentation that demonstrates clean ownership during diligence. This may include an assignment summary for each asset that shows distinct assignments for each application in a patent family. Those assignments should be executed by all inventors (including any former employees, founders, or contractors) and recorded with the USPTO.

5. Documented patentability evaluations

Everyone hopes their pending patents will be granted, but patent prosecution can take years. Investors will look for signals right now that your applications are on solid ground.

Key questions they’ll dig into:

• Was a professional prior art search done? 
• What are the closest references, and how do the claims overcome them? 
• Do the claims survive a non-obviousness sniff test? 

If nothing has been done to de-risk the application, investors may commission their own search or discount the patent’s value entirely, especially in hot or crowded sectors like AI, biotech, or semiconductors.

What to prepare: Ideally, have a formal patentability search report on hand. If you didn’t commission a prior art search before filing, consider conducting one now to get ahead of any surprises. You should also be prepared to produce a brief claim rationale memo that explains how your invention is distinguished from known art and where the application provides valuable fallback positions for potential amendments during prosecution.

6. Freedom to operate considerations

Holding a patent doesn’t mean you’re automatically free to commercialize your product. That’s because patents are a right to exclude others, not a right to operate. You can have a valid, novel patent and still infringe someone else’s broader, earlier patent.

The level of diligence expected varies by stage.

Seed and pre-Series A

At this point, investors usually don’t expect a formal FTO opinion, unless there are obvious red flags (e.g., you left a competitor and launched something similar, or your product directly builds on well-known patented methods). What does help is showing that you’ve started to think about IP risk:

• A basic spreadsheet identifying potentially relevant competitor patents
• Internal notes or a memo from counsel flagging risk areas
• Evidence that you're not ignoring obvious infringement risks

Series A and beyond

By the time you're raising a Series A or B, especially if you’ve launched a commercial product, investors are more likely to expect a freedom to operate search, and in some cases, a formal FTO opinion.

• A search surfaces potentially problematic patents and helps frame risk, but doesn’t provide legal conclusions. It’s often the first step.
• An opinion offers a written legal assessment of whether your product is likely to infringe based on the claims reviewed. It’s more costly, but can materially reduce investor concern.

In later-stage rounds or M&A diligence, if no FTO work has been done at all, counsel may view that as a red flag, particularly if competitors are litigious or have active portfolios in your space.

What to prepare: If you're early-stage, bring whatever lightweight FTO work you've done (even if it's internal). If you're post-launch or fundraising beyond Seed, include your FTO search results and any formal opinions or risk assessments from counsel. Bonus points if you’ve documented design-arounds or product decisions made with FTO in mind.

Draft patents that stand up to investor scrutiny

IP protection may be essential to any burgeoning startup or company, but high-quality patents aren’t easy to come by. They're expensive, time-consuming, and steal precious bandwidth from your engineering team.

Luckily, there’s a better way. Patentext is a patent drafting platform that helps teams build stronger IP portfolios faster. It generates structured, high-quality first drafts that your existing counsel can review, refine, and file — the result: lower legal costs, less back-and-forth, and more confidence that your IP won’t become a deal-breaker during diligence.

Try Patentext for free today.

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