In Why Invest in Patents, Not Start-Ups, Robert Klinski makes a compelling case for a radical shift in tech investing: backing patents over traditional startup equity. Drawing on his background in signal processing and years of experience as a European patent attorney, Klinski lays out a strategic blueprint for leveraging IP as a high-efficiency investment vehicle. Rather than pouring millions into early-stage companies—where the odds of success are dismal—Klinski proposes investing in the right patents at the right time in the technology lifecycle. This summary captures Klinski’s contribution to “Winning with IP, Managing Intellectual Property Today”, 2nd Ed. Consultant editor: Adam Jolly, Jan. 2022 the key themes, insights, and strategies from his work.

Rethinking Tech Investment: From Equity to IP

Startups are seductive but risky. The standard venture capital model assumes that one out of ten bets might pay off handsomely, two may break even, and the rest will incinerate capital. High failure rates, complex scaling challenges, and unpredictable markets make traditional tech investing fraught with risk. Klinski asks: why not mimic the financial world’s use of derivatives and options by investing in patents—soft assets that represent legal ownership over technological innovation?

Patents, he argues, are like financial options: they offer exposure to upside while capping downside risk. Filing a patent application under the Patent Cooperation Treaty (PCT) costs a fraction (around 1%) of what it takes to back a startup. Investors get up to 31 months of priority protection, during which they can evaluate whether to pursue or abandon the patent, giving them a strategic hedge on emerging technologies.

The Power of Patent Portfolios

The cost comparison is stark. For the price of investing in one startup (approximately €10 million), an investor could create ten separate patent portfolios across the top five global markets. That’s potentially hundreds of protected innovations for the same capital exposure. Yet despite the clear economic advantage, most investors still chase equity in young companies.

China has been quicker to recognize the value. Investors there are increasingly using patents to time their bets on maturing technologies. They aim to invest just as a technology exits the experimental phase and begins scalable commercial growth—the sweet spot of the innovation lifecycle.

The Missed Opportunity: Engineers and IP

Most engineering teams are trained to solve incremental problems: make a chip faster, reduce heat emissions, improve signal strength. While these improvements matter, they rarely translate into breakthrough IP unless the right mindset is in place. The challenge, Klinski notes, is that engineers often overlook patentable innovations, especially in digital domains like AI, IoT, and 5G, which are mistakenly thought to be outside the scope of IP protection.

He recounts how a leading mobile operator in Europe had all but dismissed filing patents for their 5G innovations—until guided conversations with Klinski’s team uncovered over 80 unique inventions. More than 50 were ultimately filed as patent applications, many already granted. The difference came from aligning engineering thinking with IP strategy and market needs.

Understanding the Technology Lifecycle

Klinski stresses the importance of timing. Every technology follows a lifecycle: emergence, growth, and maturity. At the outset, costs are low and uncertainty is high. During growth, patents become more expensive and competition intensifies. Once a technology matures, IP is costlier to maintain and delivers diminishing returns.

Investing too early means staking money on unproven markets. Investing too late means wading into crowded waters. The ideal point—what Klinski calls the “technology sweet spot”—is when innovation has begun scaling, but is not yet commoditized. Patents filed here can dominate the market and generate outsized returns.

Lessons from Disruptive Technologies

The book references Harvard professor Clayton Christensen’s The Innovator’s Dilemma, which outlined how disruptive technologies sneak in through low-value segments before overtaking the market. These often pose immense technical challenges and go ignored by incumbents, leaving room for new players to set the narrative—and secure the patents.

Blockchain serves as a case in point. Originally conceived to secure digital currency, it evolved into a platform innovation that addressed a real market need: decentralized trust. Investors who understood the disruptive potential early on were able to frame and protect technical solutions that now underpin everything from NFTs to supply chain transparency.

A Three-Step Strategy for Innovation

Klinski outlines a practical framework for turning disruption into IP:

1 . Define the Market Challenge: Understand what the market actually needs, not just what current tech can offer.

2 . Frame a Technical Problem: Articulate a solvable challenge for engineers that aligns with market expectations.

3 . Harvest Innovation: Collect and patent the resulting solutions.

This method doesn’t just result in a patent for the sake of one; it creates strategically valuable IP tailored to real-world demand. It works particularly well for technologies like AI, 5G, and cybersecurity, where regulatory frameworks and market forces are still evolving.

Why Engineers Struggle With Disruption

Klinski is candid about the mindset gap. Engineers are often conditioned to think incrementally and technically—not strategically or abstractly. They improve what exists rather than imagining what could. This makes it hard for them to spot patent-worthy inventions unless prompted by broader business and IP goals.

Patent examiners have a similar limitation. Their job is to compare new inventions against existing “prior art” and determine novelty. If engineers can’t articulate how their solution addresses a new problem, especially one defined by the market, they’re unlikely to receive patent protection—even if their work is innovative.

The 5G Patent Goldmine

5G offers a rich case study. Unlike blockchain, it may not seem radically disruptive at first glance—most of its hardware builds on 4G infrastructure. But the real value lies in how 5G networks are configured.

Through “network slicing,” operators can create dedicated sub-networks tailored to specific applications—whether that’s video streaming, AR for stadiums, or mission-critical services like autonomous vehicles. Each slice demands a unique configuration, performance level, and latency tolerance. These tailored solutions are prime candidates for patent protection, assuming the technical challenge is properly framed.

By focusing on how these services are deployed, rather than just how data moves, investors and companies can uncover a wealth of IP opportunities.

Making Software Patentable

One of the biggest myths Klinski debunks is the belief that software innovations can’t be patented. While it’s true that software “as such” is often excluded, software that solves a technical problem is not.

At the European Patent Office (EPO), examiners follow a “problem-solution” approach:

  • Identify prior art
  • Define a technical problem
  • Assess whether a skilled person could derive the solution

As long as your invention provides a tangible technical benefit—such as more efficient data processing or a new way to configure a network—it can meet the requirements for patentability. This opens the door for protecting innovations in AI, big data, blockchain, and cybersecurity.

Investing Through the Lens of IP

Ultimately, Klinski is advocating for a fundamental shift in how we think about innovation and investing. Instead of chasing high-risk equity in startups, he proposes a smarter alternative: use patent strategy to secure innovation and tap into emerging markets with lower risk and higher leverage.

This approach not only minimizes capital exposure but also increases the odds of capturing value from technological disruption. It aligns engineering, legal, and financial mindsets around a common goal—creating future-defining technologies that are also legally defensible assets.

About the Author

Robert Klinski began his career in signal processing at Fraunhofer Institute ESK in Munich. Today, he’s a European patent attorney and the founder of Patentship, a firm that has created and patented over 150 inventions in frontier tech including AI, IoT, 5G, and blockchain. With operations expanding into Asia, Patentship serves clients who see IP as a core investment strategy, not just a legal formality.

Final Thought: IP as the New Frontier

Why Invest in Patents, Not Start-Ups is not just a book about legal tactics—it’s a manifesto for the future of innovation finance. Klinski’s message is clear: patents are no longer just for legal departments; they’re strategic tools that, when timed and crafted right, can outperform traditional equity investments.

For tech investors looking for asymmetric returns without the conventional risks of startup failure, this patent-centric approach may well be the next big frontier.