Patsnap Secures $300M Funding Backed by SoftBank and Tencent

The Growing Importance of R&D Expense Analysis

As businesses globally increase investment in research and invention to maintain a competitive edge, the necessity of evaluating the effectiveness of R&D expenditures is also escalating.

PatSnap: A Solution for Innovation Intelligence

PatSnap is a company dedicated to fulfilling this need. Its co-founder, Jeffrey Tiong, recognized the pivotal role of intellectual property and patents while working within the medical devices sector over a decade ago.

Founded in 2007 in Singapore, PatSnap initially focused on creating a comprehensive global patent search database. Over time, the company broadened its scope into related areas.

Innovation Intelligence Software

PatSnap’s latest offering, termed “innovation intelligence” by Tiong, assists organizations in analyzing their R&D strategies. It also enables them to monitor competitors and pinpoint potential collaborators.

This is achieved through the analysis of data encompassing scientific publications, government R&D grants, and news regarding startup funding.

The Changing Landscape of Innovation

“We’ve observed that many companies view innovation as a specific department, a function, or a key performance indicator,” Tiong explained. “Numerous companies are employing individuals tasked with identifying emerging technologies and tracking the activities of others.

Self-sufficiency is no longer viable in today’s environment; partnerships are essential.”

Significant Investment in PatSnap

The increasing focus on R&D has attracted investor attention. PatSnap’s recent funding round saw participation from SoftBank’s Vision Fund II and Tencent as leading investors.

The Series E round secured a total of $300 million, with additional investment from CITIC Industrial Fund, a component of the CITIC Group; Sequoia China; Shunwei Capital, founded by Xiaomi’s Lei Jun; Vertex Growth; and Vertex Ventures Southeast Asia & India.

SoftBank’s Rapid Decision

Masayoshi Son, the founder of SoftBank, reached a deal with PatSnap after a brief, less than 30-minute conversation with Tiong. Having patented and sold an invention for $1 million in his early twenties, Son “understands the significance of inventions, intellectual property, and innovation,” Tiong stated.

While Tiong refrained from revealing PatSnap’s post-money valuation in an interview with TechCrunch, he confirmed that it has exceeded $1 billion.

Market Growth and Challenges

The United States currently represents PatSnap’s largest market, but China is experiencing rapid growth in revenue. In 1999, the World Intellectual Property Organization (WIPO) received only 276 patent applications from China.

However, by 2019, this figure surged to 58,990, surpassing the number of applications from the United States.

Despite this increase, Chinese companies are generally less willing to invest heavily in software, presenting a monetization challenge for SaaS businesses operating within the country.

PatSnap operates under the brand Zhihuiya in China, serving a diverse clientele including retail brands, research institutions, AI companies, and pharmaceutical corporations.

Patent Quantity vs. Quality

The sheer volume of patents does not automatically equate to technological leadership. Tiong noted that the U.S. continues to lead in overall R&D expenditure.

Furthermore, “the quality of patents originating from China is often lower, with many representing incremental improvements rather than truly groundbreaking inventions,” he added.

PatSnap’s Global Reach and Future Plans

PatSnap currently serves over 10,000 customers across more than 50 countries. Its workforce of 700 is distributed across the U.S., Europe, Canada, Japan, and China.

Notable clients include Tesla, General Electric, Siemens, Dyson, PayPal, Spotify, and Megvii.

With the new funding, the company intends to enhance its product development, expand its domain expertise, strengthen its global sales presence, and invest in its personnel.

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