Venture capitalists (VCs) are increasingly placing their bets on startups with strong intellectual property (IP) portfolios, especially in foundational technologies. The push towards deeptech and verifiable innovation is steering funding flows away from startups built on incremental improvements, and more towards those with patent-backed technologies.
According to data from Tracxn, Indian deep-tech startups with significant IP raised $994 million across 284 rounds in 2024. So far this year, 47 IP-led startups, including Infinite Uptime, 75F, SpotDraft, Bellatrix Aerospace, EMO Energy and Attentive AI, have secured $220.5 million in funding across 47 deals, reflecting a sharp uptick in interest from VCs.
“A strong IP portfolio creates barriers to entry, signals technical competence, and provides leverage in global markets,” said Manu Iyer, co-founder and general partner at Bluehill.vc, which has backed deep-tech startups such as EtherealX, Detect Technologies and Fabheads. “For deep-tech investors, IP translates to lower technological risk, enhanced long-term exit potential, and even salvage value in the event of a pivot.”
With concerns mounting regarding the overuse and misrepresentation of artificial intelligence (AI) capabilities among early-stage startups, VCs are becoming increasingly wary. Investors now seek IP-backed solutions as proof of originality and substance, rather than those riding AI buzzwords without true differentiation.
Startups such as Ather Energy (EV and battery tech), Agnikul and Skyroot (space tech), Log9 Materials (advanced battery innovation), Lohum (battery recycling), Strand Lifesciences (computational biology), IdeaForge (drones), GreyOrange (warehouse robotics), SatSure (satellite remote sensing) and Niramai (healthtech) are among those that have built robust IP portfolios, attracting significant investor backing from the likes of pi Ventures, Axilor Ventures, Mayfield India, Speciale Invest, Temasek, GIC, Tiger Global and InnoVen Capital.
“VCs prefer startups with IP because it increases long-term valuation,” said Dinesh Arjun, co-founder and CEO of Chennai-based Raptee.HV, an electric motorcycle startup that has built a full-stack ecosystem with in-house designed high-voltage systems. “Our IP ensures that we are not just assembling off-the-shelf components but genuinely innovating.” Raptee has filed 156 patents around its HV powertrain and design architecture.
Beyond offering a technological moat, IP ownership facilitates global expansion, licensing opportunities and strategic partnerships by opening up new revenue streams while acting as a shield against legal disputes and competitive replication. This is especially crucial in capital-intensive sectors such as AI, space tech, nanotech, biotech and robotics.
“Patents give VCs higher conviction in the uniqueness and long-term value of a startup’s technology,” said Bhaskar Majumdar, managing partner at Unicorn India Ventures, which has backed over 35 deep-tech and tech-driven startups, including IP-heavy firms such as Probus SmartThings, Sascan Meditech and Netrasemi. “Startups with strong technical foundations and proprietary IP stand out in today’s noisy innovation landscape.”