This happens because of the fact that once an intellectual property of a startup is safeguarded, it becomes safer for an investor to put in their money. Patents ensure that the commercial rewards of any new idea is reaped by the startup which ensures more profits.
It keeps the competition away as one has the sole right to his/her own product. On the other hand, an unpatented idea invites more competition. Worst case scenario, it can also result in the rivals patenting someone else’s idea thus making it impossible for them to benefit from their own idea. Intellectual property rights facilitate a startup that has already developed an innovative product to compete effectively against large companies after patenting its invention.
For any startup, the resources both in terms of financial resources and human resources are limited and so it’s imperative to decide how to allocate these minimum resources. Hence, it’s important for them to have an Intellectual Property strategy.