Anyone can look up at the sky and make a guess at tomorrow’s weather. But having actual data informs your opinion and makes your guess a little more accurate.
Which is why, as a managing director of a leading cleantech data provider and responsible for the presentation of its quarterly global cleantech data, I developed a real respect for venture investment figures.
Because while everyone’s got an opinion about the health of the cleantech space, as in weather forecasting, data matters.
Venture investment, the rationale goes, is one of the best leading indicators of the health of the cleantech sector. Where venture investment goes, so eventually goes private equity, corporate investment, and—if all goes well—exits, ultimately. Venture investment serves as a sort of proxy for what tech sectors are hot, what geographies are up and coming and is an indication (though not the only one) of which companies and investors to watch.
In presenting this quarterly data, however, I’d always been interested in other data types so as to be able to offer a fuller picture of the overall health of cleantech globally. I’d always wanted insight into patents, specifically. So I’m pleased that Berkeley, Calif.-based IP Checkups, a longtime collaborator, just introduced its CleanTech PatentEdge service—an online searchable database of international patent data.
IP Checkups has performed custom patent searches in cleantech since 2006. It has supported us at Kachan & Co. with data in our cleantech advisory consulting engagements, such as the competitive assessment project abstracted here that leveraged patent data to find companies quietly pursuing ethylene from methane.
And now, with its new service, anyone can access the patent database IP Checkups has built, query 1.5 million patent grant and application entries from the US, EP, WO and JP patent databases and produce attractive charts and tables.
Why do we believe this patent service is a big deal?
- Cleantech vendors can use this data to learn about competitors
- Large corporations can find emerging or established companies with strong patent portfolios for strategic partnership and/or acquisition
- Investors can verify the protection (and defensibility) of their portfolio companies’ IP and potentially find new investment opportunities in cleantech sectors rife with innovation
- Market research firms can study cleantech patent trends over time, compare technology sectors and research individual companies
Doesn’t patent information want to be free?
With free data available from patent offices, and in a world where digital information is chomping at its virtual bit, why pay for the information? Because it’s not easy to search the multiple free online patent databases around the world and normalize the results you get back. When importing into Excel, you’re limited to pasting 65,000 records at a time, and can only have 1,048,576 rows total (and there are a lot more than 1,048,576 patents in cleantech.) Then you then need to cut the data and develop the charts you seek, and even run the risk of the data being out of date by the time you’re done.
The relationship between cleantech funding, products and patents
I’d long wondered whether the quarterly velocity of patent filings in cleantech mapped to quarterly venture investment. Could they also be used as a leading indicator of where the industry was heading?
Unfortunately not. There’s a lag in being able to access patent filings because patent offices insert an intentional 18 month delay between filing and publishing so as to give entrepreneurs a head start in commercializing their innovations from the time of filing. As a result, patents only appear in the PatentEdge database a year and a half after they’re filed. But they give insight into where to expect cleantech products, according to IP Checkup President Matt Rappaport.
Is there a correlation between venture investment and patent filings? Does one lead the other? Historically, the two are correlated, as these two graphs show, but while an 18-month lag in patent data prevents it being used as a leading indicator of innovation, patent data is a good indicator of where to look for market-ready products. Sources: Cleantech Group and IP Checkups.
Cleantech products, Rappaport notes, generally emerge soon after the 18 month hold period. Cut the patent data by sector or geography, and you suddenly get educated insights about whether a bevvy of new thin film solar offerings are about to emerge from China, say, or what exact types of new biological drop-in biofuel processes from algae you should start to expect to see written about in the press soon. Those are different types of insights than you get from cleantech venture data.
Which sounds like it might help make the business of cleantech market weather forecasting a little more interesting.
A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from San Francisco, Toronto and Vancouver.
This article was originally published on the Kachan & Co website. Reposted with permission.
