Patents as Collateral
Use your patents to fund your company.
Your patents have value – put them to work.
An IP-backed loan is the right thing for growth companies with strong IP.
- Typical savings vs VC: 40–60% lower cost of capital
- You retain full control — no new board seats
- 45-60 day closing process (not 6–12 months)
- Straightforward terms; debt, not equity
- If your patents are infringed, we can finance the enforcement/recovery
How It Works
- Let’s Understand Your Growth Trajectory
Share basic revenue, patent holdings, and capital needs. We’ll see if you are a fit for IP‑backed financing. - Patent Collateral Evaluation
We assess the strength, relevance, and monetization leverage of your issued patents—either supporting your current product line or indicating credible infringement by others. - Indicative Terms
If it’s a fit, we present non‑binding terms with estimated facility size, pricing, and covenants. - Diligence
Focused review of patents, encumbrances, revenue quality, and enforcement posture. Efficient, time‑boxed. - Funding
Close in 45–60 days. Capital deploys to growth, working capital, acquisitions, or enforcement.
Is This a Fit?
We invest in growing companies where IP is important. We want to see $5-10M in revenue and quality issued patents.
Our target companies have proven product-market fit (evidenced by revenue), but also a solid IP portfolio.
We typically want to see multiple patents (often 20 or more) that are directed towards potential licensees.
We look for patents that are detectable, but also those that capture the “reason why someone bought your product.”
How we compare to VC funding
| Venture Capital | BlueIron IP‑Backed Financing | |
|---|---|---|
| Ownership | Give up 20–40% | Keep 100% |
| Control | New board seats, terms, oversight | You retain full control |
| Timeline | 6–12 months to raise | 45-60 days to close |
| Cost of Capital | Priced for 10x fund returns | 40–60% lower effective cost |
| Growth Pressure | Forced “hockey‑stick” | Sustainable, management-led |
| Complexity | Liquidation preferences, ratchets, provisions | Straightforward loan terms |
Why CEOs Choose IP-Backed Financing over VC:
- Strategic optionality: Avoid restrictive VC terms and liquidation stacks
- Capital efficiency: 40–60% cheaper than venture equity
- Control preservation: Keep 100% ownership and all board seats
- Growth flexibility: Scale at the pace your operations can support
What We Look For
- Issued utility patents (not just provisionals or pending applications)
- US and foreign jurisdictions (especially EU patents)
- Clear link between your IP and current revenue or credible third‑party infringement (we prefer both revenue AND infringement)
- Solid unit economics and use of proceeds tied to growth
- Clean IP chain of title; minimal encumbrances
Example Results: SaaS Company
- $5M ARR financed $20M loan
- Combination of patent enforcement/operating capital.
- Company has 90+ patents in two groups: older patents have Evidence of Use against former competitors, and newer patents with high licensing potential.
- Newer patents licensed to major company in market.
- Over $50M recoverable damages on older, infringed patents.
- Company is bootstrapped, family-owned business – kept 100% ownership.
FAQs
IP-backed lending (5)
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.
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.
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.
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.
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.
Ready to Compare Your Options?
Free assessment — no pitch, no pressure, just an objective comparison of VC vs. IP‑backed financing for your specific situation.
Note: We evaluate 2–3 new transactions per quarter to maintain quality and speed.