After treading where few others dared, PatSnap founder Jeffrey Tiong is today eyeing a listing on the NYSE

SINGAPORE (Oct 29): When entrepreneurs come up with an idea for a start-up, it is often in the business-to-consumer or consumer-to-consumer space. After all, it is deemed easier to build a brand that consumers can recognise and relate to, than to sell products and services to other companies.

Jeffrey Tiong, founder of patent intelligence start-up PatSnap, has no qualms about taking a different route, however. He is tackling the business-to-business (B2B) space head on.

PatSnap is an enterprise software start-up that mainly serves the R&D market. Clients range from Italian car maker Ferrari and leading Chinese smartphone maker Xiaomi to French cosmetics brand L’Oréal. 

“We provide innovation intelligence, from patents to government-funded research to journal publications and start-up news. We compile what technology companies are working on and provide it to the R&D people — from the decision maker, who decides which area to enter and product to launch, to actual R&D engineers, to inspire them,” says Tiong, in an interview with The Edge Singapore.

In his own words, PatSnap’s patent management business is not as “sexy” as many others, but he believes he is on the right track.

Young and bold

Tiong, the year’s EY Entrepreneur Of The Year — Analytics Intelligence, took the unusual route of starting the enterprise software company right out of college. He credits the National University of Singapore’s Overseas Colleges programme for inspiring him.

“Because the programme encourages students to be entrepreneurial and start a business, I was influenced to start a business right after I graduated from NUS. I got into the medtech (medical technology) start-up because of my background as a biomedical engineer,” he adds.

Another key factor that kick-started his entrepreneurial journey was a 1½-year stint in the US as an intern at a medical device company. Working in the medical sciences industry, which prioritises creating, protecting and monetising intellectual property, Tiong learnt the value of IP as well as related concepts such as the importance of patents, and how R&D efforts should be undertaken.

Armed with new ideas and newly acquired skills, as well as a $55,000 grant from the Media Development Authority, he established PatSnap in 2007. 

After a year making limited headway in Singapore, Tiong took the bold decision to move to China. “It was mind-blowing. It was such a big market. We started our operations in Suzhou, with a lower cost structure. Back then, we could hire five programmers in China for one programmer in Singapore,” he says.

“That’s how we managed to develop the product with the limited amount of money we had. In 2009, I brought the product back to Singapore to sell to institutes like A*STAR and NUS. With a few clients, we managed to raise our first serious outside money.”

Getting PatSnap’s product offering to where it is today required refinement and listening to customers. PatSnap started out selling it to universities’ technology transfer offices, which license research out to companies.

“That was our first market; our first million dollars in revenue came from there. We refined and improved the product to sell it to the corporate R&D [market], where the real money is,” says Tiong.

PatSnap is now aiming for a bigger slice of the lucrative R&D pie, which is dominated by companies from the US and China.

PatSnap’s product started with just basic patents and search functions before adding more data sources. Now the company is looking to apply artificial intelligence to make the data analysis smarter, as well as visualisation of data.

“Now, we have all sorts of tools to help R&D departments do their work better. According to a [Harvard Business Review] report, R&D productivity has dropped by 65% over the last three decades, which means for every dollar invested, you will only get back 35 cents,” says Tiong.

“These [tools] are what the corporate customers want. They want smarter tools with actionable insights,” he adds.

 Overcoming challenges, hiring people

One of the biggest challenges Tiong has had to overcome is the lack of financial support in the early years. The start-up ecosystem back then was still in its infancy and start-ups that wanted to go global did not have access to much help. 

“There was no VC, no funding, no incubator. We were really on our own. We were even on our own going into other countries like China,” Tiong relates. Today, the environment is more conducive for start-ups, as they can seek help from government agencies such as Enterprise Singapore.

One of the keys to PatSnap’s success has been the people and teams involved, as well as a little bit of luck, according to Tiong. “You can be very hardworking, persistent and smart about it, but at the end of the day, you have to ride the right market timing. Assuming you have all these in place, then it’s all about people.”

PatSnap currently has more than 700 employees worldwide and offices in Suzhou, London, Toronto and Los Angeles. Tiong credits his team with helping to manage the company. Being able to attract people of calibre is also key to building a business. “Only if the leader has a long-term vision and [good] leadership qualities can you attract better people,” he says.

Tiong has had to endure his fair share of rejection. Among the criticisms were comments that PatSnap’s product had no value and no market, and that he had no experience.

He continued to be persistent and kept knocking on doors.

“It is very rare for a company that originated in Singapore to go global at such an early stage. Back then, there were a lot of other software start-ups as well, and those [whose domain names ended with a .sg] all died because Singapore [as a market is too small,]” he says.

Big names, big dreams

PatSnap has had several big-name investors. In 2014, it raised $4.5 million from a group of investors led by Vertex Ventures Partners, a Temasek Holdings subsidiary. Two years later, the company raised $14 million in another round led by Summit Partners; the same year, it raised another $21 million, again, from Vertex and other investors.

The sums have only gotten larger. Most recently, PatSnap raised $38 million from Sequoia and Shunwei Capital, an investment firm founded by Lei Jun, better known as co-founder and CEO of Xiaomi. With this war chest, Tiong hopes to maintain its growth momentum while ensuring it remains true to its roots.

In March 2017, PatSnap announced it was investing $22 million in an R&D centre with a partner. The move is aimed at enhancing PatSnap’s online platform by coming up with better machine learning techniques and technologies, such as language processing, image recognition and semantic search.

Tiong is dreaming big. He is eyeing a valuation of US$100 million ($137.7 million) in the next two years, and a listing on the New York Stock Exchange. To support this, headcount has been doubling every year and growth is taking place at a rapid clip.

Even with the wind behind him, Tiong is careful to remain grounded in his entrepreneurial journey. “We need to always remember that the customer is the key to everything. If we serve them well and deliver slightly more than what they expect, then we’ll continue to have the business. Hopefully, one day, I can build an enterprise company that will last longer than any of us.”