When discussing their barriers to entry, many entrepreneurs cite their pending patents. While obtaining patents is worthwhile, many IT focused VCs do not believe that they alone create sufficient barriers.

There are two reasons for this. First, the US Patent and Trademark Office can take years to issue the patent you are pursuing. In our rapidly changing markets, a new entrant could enter, dominate and exit the market before your patent is approved and legal action is possible.  Furthermore, the market could evolve sufficiently to render the patent meaningless by the time it is granted.

Second, the costs of enforcing patents is high. In order to stop a competitor from infringing on a patent your company will need to spend hundreds of thousands, if not, millions of dollars. That type of suit can distract management and absorb vitally needed resources. Furthermore, VCs are aware that they will be paying for any suits that take place during the infancy of the company.

However, VCs do value patents. Many VCs believe that patents present a deterrent to competitors and can be a valuable asset at the companies exit. That said, it is important for entrepreneurs to understand the limited importance that VCs place on patents in order to place the proper emphasis on these assets when they present their company's barriers.