Two weeks ago, Intellectual Asset Management (IAM) software vendor Anaqua Inc. reportedly received a $100m investment. The number does not appear to be officially confirmed, and different sources on the web are inconsistent about whether it represents a funding round, an outright acquisition, or a mix of both. Either way, the figure is impressive and has sent a few ripples through an otherwise placid industry.
For much of the past decades, conventional wisdom about the IP management business has had it that IP-related services, particularly renewal payment services, were the primary source of customer value – and profit – in this industry. Software was frequently used as a loss leader, a bait to win a lucrative renewals deal, or gimmick to be thrown in to increase differentiation against the competition. That was the era of docketing systems, electronic diary and calendaring tools that helped with the legal and administrative aspects of filing and prosecuting patents, such as calculating due dates, filling out forms, and paying fees.
In the mid 2000’s, new players like Anaqua in North America and Unycom in Europe entered the scene from a different perspective, and started to build pure-play software companies around the value proposition of managing intellectual assets from a business perspective. Please see our recent Whitepaper for a more detailed look at the differences between docketing systems and intellectual asset management software (IPfolio belongs to the latter category in case you had any doubt).
The behemoths of the renewals industry were quick enough to react, and used their strong cash flows to serially swallow up smaller software companies. This way, several emerging innovative players in the software market have been reduced to door-openers and customer retention instruments for the ever-lucrative renewals business, which did not help to drive software innovation in our industry.
In 2010 however, Anaqua was the first company to turn the tables and acquire a renewals service provider. Sticking to their original playbook – keeping their software offering as the main value proposition – and providing renewals as a value-added service on top seems to have worked out quite well.
We follow a similar vision, with the difference that IPfolio strives to make advanced IP management technology available to the broadest possible audience, while Anaqua appears to remain strongly focused on the large-enterprise market. So I am very excited to see them doing so well. Their successful investment round/acquisition validates the business model of IPfolio and other software-centric players in the IP Management space, and serves as an indicator that the tides have shifted: IP services are becoming increasingly commoditized, and IP management software like IPfolio is the real driver that delivers added value to clients‘ businesses, helping them to create, protect, and utilize intellectual property that is aligned with their business strategy.
Glimpsing into the future, I will not be surprised if we see more successful software companies acquire providers of renewals and other commoditized services, rather than the other way around as we have witnessed in the past. A new era has dawned, and clients will benefit by getting ever-better tools to manage their valuable IP assets.