Eran Zur knows a little something about the patent marketplace. Previously, he was president and co-founder of the RPX Corporation, and now he is the head of the Intellectual Property Finance Group at the Fortress Investment Group, LLC. He has seen the changes that have swept through the intellectual property space in the past few years, and now, he has taken that expertise in a new direction, using it to help small and medium-sized businesses (SMBs).
For start-ups that have promised their investors a Facebook style hit, but that have not yet broken through into superstardom, it can be difficult to get additional rounds of financing or loans. Often, these companies have a number of strong patents but, until now, they have had little leverage to turn those ideas into financing. That is where Fortress comes in.
These SMBs, in the past, had a few options to obtain money, selling their patents or attempting to sue infringers for example. But there are problems with both of these strategies; selling patents will cause companies to miss future opportunities for revenue, and suing companies is risky, as it gives them an opportunity to countersue.
What Fortress can provide is a loan based on the value of the patent portfolio. It analyzes the portfolio and provides a loan, with the patents as collateral. If you default, Fortress takes your patents to recoup its investment. But, this option is not as risky as venture debt, and Fortress has already helped fifteen companies in this fashion, and they are singing its praises.
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