A trademark, a copyright, and a patent that hasn’t published yet. You pick one. Here’s how IP actually feeds the number, and why “pending” is the trap.
A founder asked us a very specific question the other day. They were filling in their company profile for a valuation, they hit the question about intellectual property, and they had a real answer for once: a registered trademark, a copyright, and a patent that was filed but not yet published. So they wanted to know the obvious thing. Can I select all three? I have all three. Shouldn’t more protection mean a higher number?
It’s a fair instinct, and it’s wrong in an interesting way. You don’t get to stack your IP like badges. You pick the single strongest protection you actually hold, and that one selection applies the right adjustment to your valuation (Equidam internal methodology). The other two don’t disappear from your story. They just aren’t the thing carrying the weight.
But the more important part of that founder’s question was the patent. The one that was filed but not granted. Because that’s where most of the confusion, and most of the quiet credibility risk, actually lives.
“Patent pending” is not a patent
Be precise about the words, because the words are doing a lot of damage here.
In the US, what most founders call a “provisional patent” does not exist. The official term is a provisional application, and the patent office is blunt about what it is: a provisional application is not examined on its merits, goes automatically abandoned twelve months after filing unless you file a full nonprovisional, and on its own can never become a granted patent. It buys you a priority date and the right to say “patent pending.” That’s it.
And filing one is close to trivial. The USPTO provisional filing fee runs as little as $65 to $325 depending on entity size, no formal claims required, no oath, no examination. As the same reference puts it plainly, “there is no such thing as a provisional patent,” and the application “is never examined and therefore never becomes a patent on its own.”
Sit with what that means. You can send almost anything to the patent office, pay a small fee, and earn the right to write “patent pending” on your deck. The system does not check whether your invention is novel, useful, or even coherent at that stage. So a pending filing, by itself, tells an investor almost nothing about whether you actually own a defensible invention.
(One scope note for our European readers, since most of our audience is here: this provisional mechanism is specifically a US thing. Europe has no direct equivalent. The closest idea is a first filing that establishes a priority date under the Paris Convention. So “patent pending” travels worse across borders than founders assume.)
This is why, when we ask about patents in the valuation questionnaire, our guidance is usually to answer excluding provisional or pending filings (Equidam internal methodology). Not because we’re stingy about it. Because a provisional filing isn’t the thing the question is really asking about.
The grant is the signal, not the filing
Here’s the part that should reframe how you think about all of this. The evidence that patents help startups is real, but it’s about granted patents, and it’s mostly about money rather than magic.
The cleanest study we know of used a quasi-random natural experiment: patent applications get assigned to examiners more or less at random, and some examiners are simply more lenient than others. So you can compare startups whose first application squeaked through against near-identical startups whose application was narrowly rejected. The ones that got the grant grew substantially faster, with roughly 55% higher employment growth and 80% higher sales growth over five years. And the mechanism the researchers identified is telling: the value of the patent came largely from easing access to funding, from VCs, banks, and public markets. The patent worked as a signal and a key, not as a moat in itself.
Notice the word doing the work in that study. Approved. Granted. Not filed, not pending, not provisional. The thing that moved outcomes was the examined, granted patent, which is exactly the thing a provisional application is not.
On the fundraising side, the most on-point evidence for a European founder comes from a joint EPO and EUIPO study, which found that startups can be up to 10.2 times more likely to secure funding when they hold IP. But read the fine print, because the fine print is the whole story: the strongest effect shows up for startups that have both trademarks and patents at the seed and early-growth stage. It’s the combination, in context, that correlates with funding, not a single checkbox.
And one honest caveat before anyone over-reads these numbers. Most IP-and-funding stats are correlational. Startups with granted patents also tend to be further along, better resourced, and more often in IP-heavy sectors to begin with. The examiner-lottery study is rare precisely because it isolates something close to a causal effect. So the right takeaway isn’t “a patent causes an X% valuation bump.” It’s “a granted patent is a credible signal that tends to travel with companies that raise more easily.” That’s still worth a lot. It’s just not a lever you crank.
IP is industry-dependent, not a universal add-on
The IP-firm content online tends to imply that patents are good for everyone, all the time. That’s the natural bias of a business model built on filing more patents. The data doesn’t support the universal version.
Start with how rare IP actually is. Across European startups, on average only 29% have filed for any IP right at all. If IP were a near-universal value lever, you’d expect most ambitious startups to hold some. Most don’t. That alone should make you suspicious of any “patents add value” claim that doesn’t ask “value for whom, in what sector.”
Because the sector is where the real answer lives. The same study found IP intensity is heavily concentrated: biotechnology is the most IP-intensive sector, with 65% of startups using patents or registered trademarks. In deep tech, hardware, and life sciences, a granted patent can be genuinely load-bearing. The invention is the company, and the patent is what stops someone with more capital from simply copying it.
For most software startups, the picture is different. The defensibility usually comes from execution speed, distribution, network effects, data, and the team, not from a patent that’s expensive to enforce and often easy to design around. A patent isn’t worthless in software, but it rarely sits at the center of why the company wins. Which is why a flat “patents add a fixed premium” framing is misleading. The weight IP carries depends on the industry you’re in, and a serious valuation should reflect that rather than treat IP as one generic bonus point.
This is, mechanically, how it works on our side. Equidam’s valuation weights inputs by maturity and by industry, drawing on benchmarks from 160,000+ valued companies and 30,000+ public-market comparables, across 90+ countries and 600+ industries. The same IP answer doesn’t move the number the same way for a biotech company and a B2B SaaS tool, because in the data it doesn’t mean the same thing.
Where IP actually sits in a valuation
It helps to see where this question lives in the model, because it explains why “pick your strongest” is the right answer and “select multiple” isn’t.
Our methodology runs five methods. Two are qualitative, the Scorecard Method and the Checklist Method, and they price risk. Three are financial, a DCF with Long-Term Growth, a DCF with Multiple, and the Venture Capital Method, and they price return. The weighting shifts as you mature: early on, when there’s no reliable financial history, the qualitative methods carry most of the weight, because risk is the thing that dominates a young company’s value. As you grow and the financials become trustworthy, the financial methods take over.
IP shows up as one input among many on the qualitative side, where it functions as a defensibility signal. It’s part of the answer to the investor’s question “what stops someone with more money from copying you?” That’s a real risk, and protection that genuinely reduces it earns a better score. But it’s one factor sitting alongside your team, your market, your stage of development, your traction, and the rest. It is not a master switch.
So when the form asks for your IP, it’s asking for the single strongest genuine protection you can stand behind, because that’s the one that best represents how much defensibility you’ve actually built. A trademark protects your brand identifiers. A patent protects an invention. A copyright protects expression. They’re not interchangeable, and the strongest one for your defensibility story is usually clear once you stop thinking in checkboxes. (Brand and ownership questions also tie into how your cap table and equity are structured over time, which is the kind of thing our colleagues at Share Council model. Worth keeping clean, separate from the valuation question.)
The honesty test: can you defend it in the room?
Here’s the rule that resolves the original founder’s dilemma, and it has nothing to do with gaming a coefficient.
If you are genuinely confident your patent will be granted, with a real invention, a filed nonprovisional, and ideally a patent attorney who’ll tell you it’s likely to hold, then yes, you can select “patent.” But the moment you do, you’ve made a claim. And claims get tested. An investor’s diligence will ask about it, your lawyer will be asked about it, and a thin provisional dressed up as a granted patent is exactly the kind of thing that surfaces at the worst possible moment and quietly costs you trust on everything else you said.
That’s the actual cost of overclaiming. It’s not that you’ll get caught padding one input. It’s that getting caught on one input makes an investor re-read your whole story with a colder eye. The valuation question isn’t a checkbox to optimize. It’s a statement you’ll have to stand behind, and the founders who do this well treat it that way.
So the answer to the founder who started this: you have a trademark, a copyright, and a pending patent. Pick the strongest protection you can honestly defend. If the patent is real and nearly granted and you’d happily walk an investor through it, select it and be ready. If it’s a provisional you filed last month to plant a flag, the honest answer is the trademark or the copyright, and there’s no shame in that. The number you can defend beats the number you can’t, every time.
What this is really worth to you
The point of getting IP right in your valuation isn’t to squeeze out a slightly bigger headline number. We’d be the first to tell you no valuation is precise, and we don’t have perfect data on any one company. What you get from doing it honestly is a number you can stand behind, built on a transparent and IPEV-aligned methodology, and a shared language with investors that survives contact with diligence.
That’s the whole game. Not the most flattering estimate, but the most defensible one, the one that lets you say “here’s why our defensibility is real, here’s what protects it, here’s what doesn’t” and have the investor nod instead of squint.
If you want to see how your actual IP, the strongest protection you can genuinely defend, feeds into a methodology-backed valuation alongside everything else that matters, you can build your valuation on Equidam and find out what it’s really worth to your story.