What Investors Actually Look For in IP Due Diligence

Most IP diligence problems are not discovered during diligence. They are created two or three years earlier, in the ordinary course of building a product, and they simply sit there until someone with a checkbook starts asking questions.

By the time a term sheet is signed, the diligence list arrives fast. Companies that have their records in order answer it in a week. Companies that do not spend a month reconstructing history while the deal loses momentum.

The four questions that come up every time

1. Do you actually own what you say you own?

Chain of title is the single most common issue we see. Contractors who wrote code without an assignment clause. Founders who built a prototype before the entity existed. Engineers hired through a staffing firm whose agreement assigned rights to the firm rather than to you. Each of these is fixable, and each is much easier to fix before a buyer is looking at it.

2. Does your protection match your revenue?

Diligence teams map filings against the product lines that generate money. If the majority of revenue comes from a feature with no filings behind it, that gap gets flagged. It does not necessarily kill a deal, but it changes the conversation about what is being bought.

3. What is your exposure to third parties?

Buyers want to know whether you have looked at the field around you. A documented freedom to operate review signals that leadership takes the question seriously. Having nothing on file suggests the risk has never been assessed, which is a harder position to defend in a negotiation.

4. Is anything about to lapse?

Missed maintenance fees, abandoned applications, and expired provisional filings show up in public records. They are easy to find and easy to avoid.

What preparation looks like in practice

• A single inventory of filings, trademarks, key trade secrets, and open source dependencies
• Signed assignments for every current and former contributor to the technology
• A short memo tying each protected asset to the product and revenue line it supports
• A docket showing upcoming deadlines for the next twenty four months
• Evidence of your trade secret controls, including access policies and confidentiality agreements

None of this requires a large budget. It requires someone to own it before the deal window opens. Our IP due diligence work exists mostly to compress that preparation into weeks instead of months.

The quiet advantage

A clean IP file does more than avoid problems. It shifts how a buyer reads the company. Organized records suggest disciplined operations, and disciplined operations tend to be valued differently than promising technology with messy paperwork behind it.