Question: How can I borrow against my company’s intellectual property to help finance my business?
Answer: You don’t have to be Coke, McDonald’s or Nike to borrow against your company’s patents, trademarks or copyrights. Any small to midsize business with a modest but established product or brand name can borrow against its intellectual property. According to Bruce Berman, CEO of Brody Berman Associates—a consulting firm that specializes in helping intellectual property holders and investors maximize the value of their assets—company patents and trademarks that generate royalty streams can be securitized or turned into cash. This allows the company that owns the asset to obtain a lump sum payment representing the discounted cash flow that the license is projected to generate over a certain period of time. Even unlicensed, uninfringed patents that are not being used, especially those in the technology field, can fetch more than $50,000 says Berman. Patents that are being infringed can earn as much as $1 billion since "the high cost of enforcement makes pursuing financially minor infringements less appealing," he says.
Despite the rising value of intellectual property, it’s not as easy to get a bank to loan you money against a patent as it is to borrow against tangible assets like stocks, bonds and real estate. That’s why Berman suggests that companies looking to monetize their intellectual property seek out specialty lenders, like Paradox Capital, and specialty buyers, like Rembrandt Group.
—By Rosalind Resnick, the founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses. She can be reached by e-mail at rosalind@abcbizhelp.com or through her website, abcbizhelp.com.
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