Patents might seem like arcane documents to the uninitiated, but they are the lifeblood of many thriving businesses. In the world of technology and innovation, IP can make or break the competitive edge of companies, and it is this very factor that has fueled the rise of PatSnap, which has announced that it recently achieved a significant milestone of USD 100 million in annual recurring revenue (ARR).
PatSnap, a leading provider of “innovation intelligence” services, as co-founder Guan Dian once described, helps companies innovate faster and more efficiently. By leveraging advanced technologies such as artificial intelligence, machine learning, and natural language processing (NLP), PatSnap provides comprehensive insights into patents, market trends, and technological advancements. This enables companies to make informed strategic business decisions.
Typically, companies need to invest significant time and money in research, collecting hundreds of pieces of information in different formats before making decisions, such as creating new technology or entering new markets. Since patents are legal documents packed with jargon, they can be difficult to understand for non-experts, often requiring the assistance of lawyers or consultants. PatSnap simplifies this lengthy and expensive process by collecting information globally and providing analytical capabilities to aid understanding, thereby democratizing access to critical information and lowering adoption barriers.
According to a statement by PatSnap, its surpassing of USD 100 million in ARR reflects a 20% year-over-year growth in 2023, marking a notable achievement for the company. This growth trajectory also showcases the increasing demand for robust IP and R&D solutions and reaffirms PatSnap’s position as a leader in the field.
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A second home in China
Serving over 12,000 IP and R&D teams across 50 countries, PatSnap has established a global presence with a particular focus on China. The company’s strategic investments in local talent and technology in China have been instrumental in expanding its reach and fostering innovation globally.
In its early days, PatSnap chose to operate out of China primarily for financial reasons, tapping into the nation’s affordable labor force to support its growth. This would turn out to be a strategic move, given China’s growing focus on IP and patents.
“PatSnap’s founder started with a SGD 50,000 grant, which was not much, so he relocated to Suzhou, where he joined an incubator to stretch the startup’s runway and tap into a new and larger talent pool,” Carmen Yuen, general partner at Vertex Ventures, the first investor in PatSnap, told KrASIA in 2021.
After expanding into China, PatSnap began working with Chinese government agencies, developing platforms suited for Chinese customers, which became quite popular. Simultaneously, PatSnap continued developing its products for other countries, where the patent market was more mature.
PatSnap’s China base remains a cornerstone of its strategy, enabling the company to tap into the country’s vast pool of talent and resources. This strategic location supports PatSnap’s R&D efforts and helps tailor its products to meet specific customer needs.
China represents a significant market for IP and R&D services due to its rapid economic growth and increasing emphasis on innovation. With over 4 million valid domestic invention patents as of the end of 2023, the country has shown a strong commitment to innovation and IP protection, highlighting its immense market potential.
China’s transformation in IP protection over the past few decades has been profound. Since joining the Patent Cooperation Treaty (PCT) three decades ago, China has become a major IP power and an important player in the global innovation landscape. The number of international patent applications by Chinese applicants through the PCT has ranked first in the world for four consecutive years. The shift in emphasis from “Made in China” to “Created in China” further signifies the country’s focus on fostering innovation and enhancing IP protection to drive economic growth.
Opening up new vistas
PatSnap has benefitted from a surge in R&D spending amid trade tensions between the US and China, both contending for an edge in technology and innovation.
Despite its sizable presence in China, the company has developed ties with US organizations such as the Chemical Abstracts Service (CAS), a division of the American Chemical Society, integrating its scientific data with PatSnap’s technology to spur innovation in sectors like healthcare and materials science.
To sustain its growth and continue innovating, PatSnap raised USD 300 million in 2021 through a Series E funding round. The round drew backing from a slate of noteworthy investors like SoftBank Vision Fund 2, Tencent Investment, and others. Thought to be essential for developing new products, expanding its sales presence, and enhancing its technological capabilities, PatSnap later established self-sustainability through its subscription-based business model, achieving profitability without heavily relying on external funding.
This resilience has enabled PatSnap to continue investing in AI and product development, thriving amid global economic headwinds. Today, PatSnap’s clientele includes over 10,000 customers, featuring big names like Tesla, Dyson, Walt Disney, Spotify, and Xiaomi, among others. The company also serves universities in Singapore, China, the US, and the UK.
PatSnap has been actively expanding its suite of services to include AI tools for patent drafting, claims charting, and freedom-to-operate searches. These tools aim to accelerate discovery and enhance collaboration, particularly in the life sciences and materials sciences sectors. The development of Eureka, an AI-powered platform, integrates a large language model (LLM) with innovation methodologies, streamlining the idea generation process. Additionally, the launch of AI assistant CoPilot empowers R&D and IP teams to gain comparative advantages and boost productivity.
PatSnap’s tailored products for drug discovery and material discovery have also seen significant growth, with the life sciences segment experiencing a compound annual growth rate (CAGR) of over 50% in the past three years. Synapse, its innovative life sciences platform, connects drug discovery information with drug development insights. With a vast database of millions of data points from over 150 jurisdictions, Synapse has developed well since launch, now providing access to over 72,000 new drugs, 800,000 clinical trials, 6 million pharmaceutical patents, 62 million literature sources, and 360,000 pharmaceutical organizations.
Looking ahead, PatSnap is exploring strategic mergers and acquisitions (M&A) to enhance its capabilities and strengthen its market position. The company’s vision is to make its tools indispensable for every R&D professional, facilitating faster and better innovation.
By continually expanding its offerings and leveraging strategic partnerships, PatSnap aims to remain at the forefront of the IP and R&D landscape, driving innovation and growth for years to come.