This paper presents an analysis of startups in the digital technology domain from the perspective of the World IP Day 2021 theme, “IP & SMEs: Taking your ideas to market”. As per World Intellectual Property Organization (WIPO)  this theme represents “Critical role of small and medium-sized enterprises (SMEs) in the economy and how they can use intellectual property (IP) rights to build stronger, more competitive and resilient businesses”.
Our analysis takes into consideration some of the key startups actively developing technologies (patents) and/or having products/services related to digital technologies in selected industry sectors. It also tries to highlight influence of Intellectual Property on performance and sustainability of startups in the marketplace.
Importance of IP for SMEs and Startups
European Union conducted a study  recently on “Intellectual property rights and firm performance in the EU” that confirms the strong, positive relationship between a company's ownership of different types of IPRs and its economic performance. For example, SMEs with patent ownership are found to have 36% higher revenue per employees and 53% higher wages; SMEs with registered design are found to have 32% higher revenue and 30% higher wages; and SMEs with registered trademarks appear to have 21% higher revenue and 17% higher wages. Incidentally, it is found that revenue per employee and wage level are two key factors indicating company’s performance.
IP protection enables startups to preserve and exercise unique and differentiated product or service offerings in the competitive marketplace. One of the key success factors for a startup is to keep up with innovative offerings backed by carefully crafted Intellectual property rights such as Patents. Past studies  have established that startups or SMEs with registered intellectual property are more likely to receive funding for product commercialization. Another study  reveals that SMEs and startups that have at least one registered IP are 21% more likely to experience a subsequent growth period, and 10% more likely to become a high growth firm.
One of the key objectives of this analysis is to understand whether the same principle applies to startups as well across prominent geographies.
Analysis and Insights
The Information and communication technology space is buzzing with a large number of startups and a significant number of these startups are related to digital technologies. The scope of this analysis has been restricted to startups in digital technologies such as Artificial Intelligence (AI), Blockchain, Robotics and Augmented Reality–Virtual Reality (AR–VR) in selected industry sectors like Healthcare, Manufacturing, Supply Chain, Retail, etc. The analysis considers startups at the cross section of selected industry sectors and key digital technologies, those founded in the last 5 years (2016 onwards). The analysis also tries to highlight startup trends from the point of view of funding, IP ownership (Patents), geographies (headquarter of startup), startup sustenance (age factor), the traction score, etc. The traction score for a startup is indicative of potential of a startup derived from dimensions such as fund raised, growth rate, revenue, employees, etc.
The study further tries to analyze distribution of startups across geographies and industry sectors, level of funding success across industry sectors, influence of patent on funding across industry sectors, and relative traction score in the marketplace.
Prominent startups are identified from various sources such as Crunchbase, CbInsights, Startus-insights, Tracxn, etc. Patent information has been gathered from free and professional patent databases. This analysis is based on information available in public domain.
In the process of discovery of top 200 startups from different publically available sources for each digital technology, the applicable industry domain and relevant business functions were identified from the list of startups. Figure 1 represents the count of startups in the cross section of digital technologies, industry domain and functional areas.
Figure 1: Count of Startups in the Cross Section of Digital Technologies, Industry Domain and Functional Areas
It is observed that Healthcare and BFSI industry domain along with AI and Blockchain technology has maximum number of startups. Among the industry domains, startup population was found to be significant in the functional areas of Diagnosis & Treatment, Geriatric Care Management in Healthcare; Inventory / Warehouse Management, Logistics Management in Supply chain; Customer Experience Management in Retail; and Financial Risk Management, Cryptocurrency Trading in BFSI.
While looking from the digital technology angle, startup concentration appear to be more in AR-VR followed by AI and Robotics for Healthcare; Robotics followed by AR-VR in Manufacturing; Robotics followed by AI and Blockchain in Supply chain; AR-VR followed by AI in Retail; Blockchain followed by AI in BFSI. In the ENU industry domain, more number of startups were found to be working in AI technology space.
Among the digital technology areas, startup population is found to be concentrated in Healthcare- Diagnosis & Treatment, BFSI - Financial Planning & Management for AI; Healthcare - Geriatric Care Management, Supply chain - Inventory / Warehouse Management in Robotics; BFSI – Crypto Asset Management, Cryptocurrency Trading in Blockchain; and Healthcare - Diagnosis & Treatment, Retail - Customer Experience Management, Manufacturing - Connected Assets / Workers in AR-VR.
It is observed that startups headquartered in USA are prominent in AI technology in the industry domain of Healthcare followed by BFSI. Startups headquartered in China are prominent in Robotics in the industry domain of Manufacturing followed by Supply chain. Startups headquartered in Singapore are prominent in Blockchain technology in the industry domain of BFSI.
Startups headquartered in UK are prominent in Blockchain and AR-VR technology and in the industry domain of BFSI followed by Healthcare (See Figure 2).
Figure 3: Patent Distribution by Industry and Functional Areas
From the analysis, it is evident that Healthcare and Manufacturing industry domains along with AI and Robotics technology have seen more patenting activity. Among the industry domains, patenting activity was predominantly observed in functional areas of Diagnosis & Treatment, Geriatric Care Management in Healthcare; Product Manufacturing followed by Inventory / Warehouse Management in Manufacturing; Inventory / Warehouse Management followed by Logistics Management in Supply Chain; Shop Floor Operations Management in Retail; and Energy Consumption Monitoring & Control in ENU. In the BFSI domain, patenting activity was observed in Cryptocurrency Trading followed by Financial Risk Management and Cryptocurrency Mining.
The startups are also showing interest in a few niche and emerging areas like Pharmacovigilance, Predictive Asset Maintenance, and Customer Experience Management etc. and are also having patent protection.
Figure 4: Patent Distribution by Industry and Technology Areas
From the perspective of digital technology areas, patenting activity was predominantly observed in AI and Robotics for Healthcare; Robotics in Manufacturing and Supply chain, AI in Retail and ENU; AI followed by Blockchain in BFSI.
Figure 5: Geographic Distribution of Startups with Patent Portfolio
Startups headquartered in China are actively filing patents with 37% having IP protection followed by startups headquartered in USA with 36% having patents.
Startups headquartered in France are actively filing patents with 30.8% having IP protection as compared to other European startups.
Startups headquartered in India are also protecting IP with 24.3% having filed for patents.
It is worth noting that 98% startups received funding in BFSI industry, followed by 85% in ENU; 81% in Healthcare and Supply Chain; 71% in Retail, and 53% in Manufacturing.
From the analysis of funding received by startups in the target set of startups, it is observed that 39% startups have patents in AI technology and they received 56% of the overall funding. In AR-VR, 23% startups have patents and they received 69% of the overall funding. In Robotics, 33% startups have patents and they received 71% of the overall funding.
When looked at from the industry domain point of view, 46% startups have patents in ENU and they received 66% of the overall funding. In Healthcare, 42% startups have patents and they received 71% of the overall funding. In Manufacturing, 20% startups have patents and they received 64% of the overall funding. In Supply chain, 32% startups have patents and they received 74% of the overall funding
Overall 28% startups were found to have patents receiving 48% of the funding in correlation with technologies and industry domains. Average funding amount of startups with patents is almost 2.5 times the average funding amount of startups without patents.
Predominantly, more traction score was observed for the startups in the functional areas of Connected Assets / Workers, Predictive Asset Maintenance in manufacturing; Shop Floor Operations Management in Retail; and Logistics Management, Inventory / Warehouse Management in Supply chain.
From this analysis, it is observed that startups with registered IP (patents) have more traction score and better funding opportunity across the industry domains and technologies worldwide. As per EU study cited above, there is a positive correlation between companies’ ownership of Intellectual Property and economic performance.
Hence, one can conclude that startups owning Intellectual Property are likely to have advantage in economic performance, business potential and funding opportunity.
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Head – IP / Patent Management, CTO Office, Wipro
Sudipta has about 26 years of experience across industries in the ICT technology areas encompassing R&D, IP Management, consulting, technology leadership, strategy formulation, global service delivery, quality management, partner collaboration, and M&A.
He is Master of Engineering from the Indian Institute of Science, Bangalore and Post Graduate in Intellectual Property Law from IIT Kharagpur.
Manager – IP / Patent Management, CTO Office, Wipro
Parag has a breadth of exposure to different aspects of IP Management including IP Consulting, IP Analytics, IP Monetization, and IP Valuation. He has vast experience in handling and managing customer projects in emerging technologies like Blockchain, Autonomous Vehicle, 5G and AI, and Cognitive Computing.
Parag holds a Graduate degree in Electronic & Communication Engineering from Thapar Institute of Engineering & Technology, Patiala.
Manager – IP / Patent Management, CTO Office, Wipro
Esheetaa has over 6 years of experience across different aspects of IP Management including IP Consulting, IP Analytics in emerging technologies like blockchain, AI & cognitive computing, and cloud computing technologies. She is instrumental in harvesting invention disclosures related to various technical domains, patentability assessment, promoting IP awareness, building a culture of innovation and conducting IPR awareness / training on patents & design.
Esheetaa holds a Bachelor’s degree in Computer Engineering, and LL.B. (Hons.) with specialization in Intellectual property law from Indian Institute of Technology, Kharagpur. She is also a registered patent agent with the Government of India
Lead Consultant – IP / Patent Management, CTO Office, Wipro
Sudharm is vastly experienced in the different aspects of IP Management, such as IP Consulting, IP Analytics, and R&D. In addition, he has experience in managing customer projects in the areas of Energy Management Systems, Consumer and Industrial (C&I) Appliances, Smart Applications, Cognitive Computing/ Artificial Intelligence, Autonomous Vehicle (AV), and Chat-Bots.
He holds a Graduate degree in Electronics and Instrumentation Engineering, and a Master’s degree in Control and Automation, Electrical Engineering from the Indian Institute of Technology, Delhi.
Assistant Manager – IP / Patent Management, CTO Office, Wipro
Raju is highly competent in the various aspects of IP Management, such as IP Consulting, IP Analytics, and R&D., He has spent years managing customer projects in domains, such as Consumer and Industrial Appliances, Wind Turbines, Artificial Intelligence, Augmented / Virtual Reality, and Multi-Modal Systems.
He holds a Bachelor’s degree in Electrical and Electronics Engineering and is a registered Indian patent agent.