This is a fair question, as some IP-backed lenders are more of a “distressed debt”-type lender, who focus on enforcement. We prefer operating companies where the mindset is to grow the company (and maybe exit to acquisition/IPO). We do not have a “loan to own” mentality. We want you to succeed. When you grow your…

We evaluate your IP to see if we believe there is enough collateral to underwrite a loan. If we like the IP and your business prospects, we offer a term sheet with a proposed loan. Sometimes, we have the option to get an “insurance wrapper” on the collateral – an insurance policy that ‘guarantees’ the…

The patent loan program requires several items about your patents and your business plan.  This is not a complete list. 100% ownership of your patents. Your patents must be completely unencumbered and must be owned by the operating company. Some investors might attach liens to the intellectual property, which is a non-starter. In many cases,…

We prefer to provide loans to revenue generating companies, but we will consider pre-revenue companies in some cases. The loan program is a loan, after all, and we will evaluate your company to see if we believe that you will be able to repay the loan. Taking out a loan is much different than selling…

A patent loan will come with several other components, including insurance for patent enforcement and patent defense. Because a patent loan is specifically designed to help you expand your business, we want you to focus on generating revenue, not litigation. Therefore, we give you at least $2,000,000 in patent enforcement insurance and patent defense insurance.…

No. The patent loan program does not normally require a personal guarantee. We provide an insurance product that will guarantee a lender in case of a default. However, a lender may still have the final say as to whether or not to require a personal guarantee.

The effective interest rate for a patent loan will be in the neighborhood of mid- to high-teens. In some cases, we can offer loans in the low-teens, but that is usually reserved for companies with especially good cash flow. Please note that this rate is much lower than angel or venture equity, which is typically…

Infringed patents can help (or hurt) your chances for a patent-backed loan, depending on the situation.In some cases, we put together an enforcement plan alongside a loan, where the loan gets paid off with the proceeds from the enforcement. In those cases, the enforcement and loan work hand-in-hand. In general, infringement of your patents is…

We typically consider patents as the primary asset in an IP-backed loan, although we also consider trade secrets and company data as valuable assets to loan against. A software company’s code base may also be collateralized, but typically as a secondary asset. Trademarks occasionally can be considered, but they are on a case-by-case basis. A…

Patent valuation is a difficult subject because there are many different people using many different techniques to come up with a ‘value.’ In general, the only meaningful metric of patent value is revenue. Either you are selling a patented product, or an infringer is selling an infringing product. The value of the patent is determined…