Investing in a new technology area requires in-depth research before deciding if it’s the right choice and timing. Technology investments could be in the form of funds from angel investors, venture capitalists, companies or grants from the government and other institutions. Before investing in a new technology/product, you must first consider the economic, technological, and business viability followed by a risk assessment, patent valuation and due diligence. Moreover, patent data also helps you assess technology trends and disruptive innovations in advance. So, combining patent information with market data helps in making a more informed decision about research investment.
Before investing in a new technology space, you need to ensure that you are investing in the right area. Studying patenting trends, evaluating the quantum of existing patents and studying technological strengths of competitors will give you an idea of the current landscape.
Patent Trend Analysis – Statistical analysis of the publication rate of patents in a certain field or company provides information about technology maturity and existing R&D investments in it. This helps understand if the technology is ripe for additional investments. You can further use this to stay updated on the overall technology trends in the space.
Market Interest – Patents helps you identify the key competitors that exist in the technology you are looking at. Validating the interest levels of the competition such as their level of aggression in new patent filings gives a clear indication of the market potential of the technology.
Another step in validation is to study competitors’ existing IP and if they pose a risk to the proposed transaction. A risk assessment will provide early warning signals (if any). The following techniques listed below are used for this validation
Hence, patents provide business intelligence information from which the competitors’ strategies can be predicted. This can be helpful in developing your own technology strategies to counter them.
The valuation of IP assets is an important parameter for deciding the technology investment quantum and value. An IP valuation exercise for the existing set of IP helps decide the price point for the proposed investment.
IP valuation comprises cost-based valuation (cost estimates for innovative idea generation, patent filing and maintenance fees), market-based valuation (patent portfolio comparison with competitors on the basis of technology, portfolio size and quality) and income-based valuation (calculations of patent portfolio income during a certain time frame).
Once the technology validation, risk analysis and valuation tasks are completed, you should undertake legal and financial due diligence to mitigate any other investment risks.
Briefly put, multiple factors such as technology popularity, consumer perception, and future market trends ultimately affect your investments. Nevertheless, with thorough IP research and analysis, you can make difficult decisions about technology investments in any R&D-driven business less risky.
Explore Patent Intelligence’s role in analyzing technology landscapes for investments in our latest blog. Learn how patent data informs pre-investment research, providing valuable insights into the current technology landscape.
