Patents and Startups
If you look at the US and two very active VC investment markets there, California and Massachusetts, it is no surprise that the level of IP creation is quite high in both these states. Obviously, IP alone is not the only ingredient to successful startups, but in the hands of a good entrepreneur, IP can act as a key ingredient to cook up some outstanding companies.
How does India fare?
As can be seen from the above graph and the statistics, India has some ways to go to catch up with other leading IP generating countries such as the United States and China.
My Key Observations
Still early days in India
- India is 10 years behind China in terms of patent numbers
- Patents are around Indian market constraints and application of technology to solve these constraints (e.g. Financial Tech, Mobile) – what some might call Frugal Innovation or Reverse Innovation
- Unusually high concentration in Biotech/Life Sciences
- Fundamental scientific innovation still rare
- Not too many IP-based exits (M&A, IPO) hence startups not too eager to file – especially in IT. This will change with more IP-based exits happening.
- IP incubation centers such as academic institutions need more active participation. It’s tough for VCs to fill the shoes that an academic center plays (in countries such as the US) over extended periods
Questions/Observations of other participants
- India files about one-tenth the patents filed in China. Also 60% of Chinese patents are filed by Chinese companies. In India, only 20% are by Indian companies, rest is by MNCs.
- Public companies, particularly the bigger IT companies cannot compromise on margins even by a few basis points. This makes it tough for them to focus on long-term and spend money on IP
- Time bound (project based) innovation happens in India but that’s not the same as unconstrained innovation that happens in startups in the US (based on one technologist’s experience working in startups in the US as well as India)
- There is a need for multi-disciplinary faculty to enable IP creation (and guide doctoral students) for solving real issues faced by industry
- On a similar note, Indian industries do not value PhD and due to this the brightest and the best opt for an MBA post their undergraduate degrees or go abroad to do PhDs and never return
- Frugal innovation – someone had questions around whether this can really produce IP. Particularly in areas such as “Open Source” software development (which Indian companies adopt for cost reasons).
I have outlined above some of the questions/observations from the session. Just want to throw these out and see what people have to say about this.
Would love to hear reactions on this very important topic from a startup ecosystem perspective.