Patent Analysis and VC Funding

Small and medium-sized enterprises (SMEs) represent over 90 % of enterprises in most countries, worldwide. They are the driving force behind a large number of innovations and contribute to the growth of the national economy through employment creation, investments and exports.

Among these SMEs, technology start-ups form a decent sized category. In recent years, success of technology and scientific start-ups has encouraged equity investment from institutional investors. Not only are funds cash rich, but opportunities are abundant. However, this abundance has a flip side – the fact that there are so many startups, some are bound to unwittingly infringe on existing patented technology. After all, a VC investment is always a risk and institutional investors would like to derisk the investment as much as possible.

Due Diligence on the startup’s claims is not just a pre-requisite. It’s in the best interests of the investor to know his investment is not infringing on proprietary patented technology. When a VC is betting on a start-up’s Intellectual Property, the last thing he would like to see is the startup caught in a legal tassel for its intellectual property rights. An expensive lawsuit is a threat big enough for VCs to back out from what seems like a lucrative investment.

Tools like Patent iNSIGHT Pro – a powerful patent mining and analytics engine can give the VC an immediate insight into the ‘patent mesh’. The application can provide an investor insight into the startup’s claim, it’s viability in the present and future markets and most importantly, he can identify the ‘landscape’. This means he can understand how technologies have been raising investment in the past and the trends of how many of these technologies have made it big. He can evaluate the ‘fit’ with reference to the existing and potential competitors as well as customers. The tool will generate detailed information that will form the basis of warranting the success of the business model based around that technology.

Institutional investors are the one of the biggest beneficiaries of such Patent mapping and analysis tools. A powerful Patent analysis tool can help investors identify new opportunities and isolate technology IPs that could make it big tomorrow, based on trends and the patent landscape.