Deal focus: Patsnap leverages innovation boom

Chinese smart phone maker Xiaomi has ambitions to become a global power, with a presence in India, Brazil, Russia and Mexico as well as its home market. Patent infringement lawsuits pose a very real threat to this plan as foreign counterparts seek to block the Chinese player's path. Ericson and Blue Spike have tried it in India and the US, respectively.

From consumer electronics to robotics to mobile devices, these legal issues - and associated costs - can crop up when companies expand abroad. Patsnap, a web-based intellectual property (IP) analytics and management software provider, was established to address the needs of this evolving market where innovation is essential to building global businesses.

Patsnap emerged within an accelerator program at the National University of Singapore in 2007. Two years later, it moved its core operation to China and now more than 60% of its 300 employees are based in the country. The company has built up a database of over 118 million patents from 100 countries, as well as a wealth of information on licensing and litigation, patent valuation, and trademark recognition. Corporations can use Patsnap to conduct IP analytics on competitors or to build new technologies based on registered patents.

"Southeast Asia isn't the most developed market for technology innovation. When we look at the amount of capital from governments and corporations committed to technology R&D, the US ranks number one, followed by China and Europe," says Dian Guan, Asia vice president at Patsnap. "China is transitioning from the concept of made-in-China to created-in-China. We see more companies willing to pay for technology research data."

Earlier this week, the firm closed a Series C round led by Sequoia Capital China, with participation from Shunwei Capital Partners, which is co-founded by Xiaomi founder Lei Jun, and Qualgro, a VC firm active in Southeast Asia and Australia. The investment is understood to be worth tens of millions in dollars. Patsnap raised a $3.6 million Series A round from Vertex Ventures in 2014 and a $10 million Series B round from Summit Partners last year.

"Sequoia and Shunwei are seeing the rise of business-to-business companies in China, which will gradually replace the trend of investing in business-to-customer firms," says Guan. "For Shunwei, I think they have recognized the importance of IP protection after Xiaomi's experience in overseas expansion. That's how they discovered our value."

She estimates global R&D expenditure amounts to $1 trillion every year, and the number keeps growing. Revenue from specific verticals, such as legal IP analytics, are each worth $1-2 billion per year. With offices in London and Singapore, Patsnap now serves over 3,000 customers in 40 industries including NASA, Vodafone and L'Oreal. The latest funding will help the company scale its business in terms of technology innovation and product development.

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• Topics
• Greater China
• Technology
• Expansion
• China
• Sequoia Capital
• Shunwei Capital Partners
• Venture
• professional services