Patent Law FAQ
This FAQ answers all your questions about patent law, patent procedure, and the patent examination process.
IP-backed lending (5)
We look at loans in a similar way to venture debt, but with a big difference: we can give you credit for your IP.
Because we can enforce/license/sell IP, we have ways of recovering a loan value in a default. This is something that other lenders do not have.
A mortgage bank has expertise and experience in valuing and liquidating real estate, so they are the right lenders for that.
Our expertise in IP allows us to lend against the IP, where we know how to get the most out of that asset.
Venture capital is priced to cover the fact that most of their investments fail — so they need outsized returns from the 1 out of 10 that succeed.
That means selling equity at a very high effective cost of capital (which typically averages 50% IRR).
With IP-backed lending, we’re underwriting against the strength of your patents and revenue.
Because we understand the assets and our downside risk is lower, we don’t need “moonshot” returns — making our capital half the cost of VC equity.
Our typical terms are 2-5 year loans, often with a period of interest-only payments.
The interest rate varies based on the risk and your situation, but will be less than half the cost of venture capital.
We may or may not insure the IP-backed loan, but we handle that on our end. You are not responsible for the insurance.
Your terms will be customized for your situation.
In our view, infringed patents are the best indicator of value.
We can structure capital for enforcement, including pre-litigation strategy and litigation finance, where appropriate.
We can also structure a loan that gets paid off by proceeds from the litigation.
We generally require $5M+ annual revenue or a strong enforcement case. If you are getting close to that number, let’s have a discussion. If you are pre-revenue, let’s wait until you have your first few customers.
We require actual revenue because that is the simplest way to prove that the idea has commercial value. Your idea may have potential value, but we require actual, proven, real value before we can provide financing.