Role of Startup’s Intellectual Property in VCs Investment Decision-Making: Evidence from Russia

While most academic papers claim that intellectual property (IP) rights, and especially patents, are useful and necessary for early-stage startups, evidence from the practice frequently demonstrates the opposite: patents are excessive and not of the great value for early-stage ventures. In this study, we aim to provide deeper understanding of the described contradiction and to try to explain why it exists. To achieve the goal, we interviewed 17 venture capitalists (VCs) based in Russia, who actively invest in startups on international scene and in Russia. The results from our sample suggest that IP may be more important for startups in the later stages, and not equally useful at the beginning of their development. We believe that main differentiator between early and later stages of a startup (which crucially influences on the role and value of its IP in the eyes of VCs) is not size or age, but the validation of startup's business model. This proposition is going be tested in the further research.