Securing resources is crucial for startups. This study investigates whether startups intentionally time patent applications to align with their funding needs and, if so, examines the effect on their innovation and growth. Using data from PitchBook and the USPTO, we focus on 4,779 startups that filed at least one patent within 24 months before their first VC funding round. Our findings reveal that patents filed closer to funding events are of lower quality, indicated by fewer grants, 9.4% fewer forward citations, and lower overall quality. This strategic behavior is heterogeneous among startups. Consistent with our theory, technical expertise and financial resources mitigate the negative impact. Furthermore, the higher the strategic nature of the patent application, the lower the probability of the startup obtaining further funding. These insights contribute to understanding how startups use patents as strategic signals and how such strategic behavior impacts the quality of the innovation and the startup’s future growth.
