January 7, 2016
by: Pat Guenthner
Inventors at early stage companies are interested in protecting their livelihood and their technology. In doing so, they have to make strategic decisions about how to get the capital needed to grow rapidly the market and respond to increasing demand. There are two traditional alternatives for acquiring capital for operating expenses. One is selling shares of stock, which dilutes profits and equity; and taking out loans at traditional financial institutions, which require a demonstrated ability to repay and some form of collateral. A new alternative for some, so that they can continue to generate operating capital, is to borrow against the value of their patents. Some banks, i.e. Silicon Valley Bank,secured by tangible items. Loans against “products of the mind” are now possible as insurance companies move into the business of issuing policies insuring the value of the intellectual property collateral. IPISC’s Asset Backed IP Insurance policy turns patents into collateral. If the investment fails when structured as a loan, the lender is reimbursed the unpaid balance of the loan.