ֿDomain: Patents/IP
Status reached: ARR of $10K, pre-investment
When: Feb 2020 – April 2021 in a full-time capacity. The company closed at the end of 2022.
Team skillset: Entrepreneurs with technological backgrounds
Thesis/Idea
IP optimization platform
The idea came from my co-founder. He had started a hardware company, and early on was told that he needed to register patents. After the dust settled from his company closing down, he went over the invoices of their IP spending and realized he had overpaid large amounts. In certain instances, it felt like he was “forced” into paying as he had bigger things to deal with as a CTO. In addition, when patent work is done inaccurately, it leads to fines and can even lead to a lost patent. There aren’t many tech solutions out there and those that exist aren’t particularly good.
The idea was to develop an engine that optimizes patent registration, identifying the best location and time to register. For example, if a company’s patent can be defined as a ‘green’ patent, it might be better to start in a country that gives subsidies for these patents, and initiating the registration there can save money and accelerate the process. For reference, PCT, for example, is a treaty where many countries agree to collaborate on IP matters.
The data in this world is public and there are companies you can buy an API from. The easy part is getting the data. The hard part is analyzing it.
One issue was identifying the user. We decided it was the person managing the IP portfolio at a big company with 10-60 patents.
We built a scraper to identify the relevant companies, categorizing them by portfolio size and estimating their spending and what we could save them. We understood there are enough companies to build a $1B company.
Why it didn’t progress
- After six months we saw that the amount of development needed necessitated a round and started talking to investors.
- But while there was interest from investors, it was from angeles who did not offer attractive enough offers and not VCs, which is what we wanted.
- The main feedback from VCs was that the space isn’t interesting as the patent market is shrinking and that the revenue was not enough per customer.
- We did get some interest from VCs and angels, and reached a $2.5M round, but then two VCs dropped out.
- The partners had families, and didn’t want to continue either.
- This led to a few pivots. The main one was when an IP law firm was willing to collaborate with us, and we thought that the better path might be bigger deals with the law firms themselves rather than the clients.
- Companies want to see how you improve the bottom line and it takes time. It was hard to sell the idea.
- We also made a mistake with a salesperson in the US. We met someone who was very experienced and wanted to work just on equity. We weren’t sure if he was a good cultural fit, and by the time we decided he had gotten another offer. Having a US-based sales person might have changed the outcome.
Insights:
-In retrospect, I would have gone to the top 10 VCs in Israel and asked them what they think about the space, even before talking about the problem and solution, to see if there’s interest. That’s the most important thing. If you’re good at execution, you’ll get money. But you need to be in a space that’s growing.
Research
- We spoke to the former head of the USPTO and many others, mostly in the U.S., and were in touch with major companies like Amdocs.
- Suggestion was to see if we can sell into the US market, even with a product that isn’t yet mature.
- Companies researched:
- Patentbot
- A product by Reuters that gives a lot of IP data. Most of the products were outdated and didn’t give a full solution
- Patent Renewal – a small company with five people. We wanted to do something together, but they weren’t interested in expanding.