A small mobile game company in Australia recently received over AU $3 million dollars from a Chinese competitor. It's strategy of licensing well-known brands and turning them into successful mobile games is what attracted the investment capital.
Intellectual property is key asset that attracts investor capital. A recent white paper by the World Intellectual Property Organization confirmed that IP is big reason in obtaining private equity and venture financing.
Some of my clients have leveraged their licensing deals in this way to attract investors. In one case, it was an early revenue strategy, using major kids TV brands for quick entry into retail to gain credibility with investors. With another client, getting exclusive rights to several high-profile entertainment properties gave them a competitive advantage that attracted investment capital from a private equity fund.
IP is used as collateral or security for debt finance, or as an alternative basis for seeking equity from friends, family, private investors venture capitalists, specialized banks and some times even from regular banks.
An evolving niche in IP financing is Royalty Monetization. In these transactions, you can sell (or assign) all or part of your licensing royalty streams to a buyer (funding source) in return for cash paid upfront. Your business receives the payments from a licensing contract upfront than over the term of the licensing agreement.
Making the most of your IP assets requires routinely identifying and protecting them. If your company has little or no revenue, your IP represents a big part of your company value.
Your approach to making the most of your IP is a significant factor when investors and/or co-venture partners consider investing in your company. Sophisticated investors look for a sustainable competitive advantage when evaluating a business as a potential investment.
Are you putting your IP assets to work for your business? If not, you are overlooking a valuable asset for attracting investor capital. Contact Licensing Consulting Group today to find out how we can help you use your IP assets to secure financing options for your business.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He's licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid's action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money Making Power of Licensing was released in 2019 and is available on Amazon.com. He's also a published writer with articles appearing in several prestigious trade magazine including The Licensing Journal, Intellectual Property Magazine, and License India. Rand also mentors at the Cal State Fullerton School of Business and Economics and is a judge for their startup business plan competitions.