The Technology Licence Investing is a mechanism by which
technology may be made available to select high-growth potential companies, effectively
availing the licensees, technology that is needed to enable realizing the growth potential
of the licensee in exchange for shares in the licensee legal entity. Enhance
Knowledge by virtue of the authorization it is granted, sometimes negotiates such technology licence investing towards the funding of a licensee-company in an effort to
enable the licensee start operating as soon as it is practicable.
In general, the shares offered in exchange for the licence
investing may be Convertible Callable Series Preferred
Shares that collectively is specifically secured by the value of the Technology Licence
evaluated as a percentage of the revenue based on the Income Statement of
the Prospective Financial Statement over the term of the Technology Licence
Agreement which is usually about 15 yrs - 17 yrs, subject to adjustment to
reflect reality of annual realized revenue. The offer of secured equity form is made with the aim of
providing no-risk securement of the investment for the technology licensor
for the attendant advantages.
However, there is always the preferential option of the
licence-investor willing to take the venture stage investment-risk, to
opt for the equity offering to be all in Common
Stocks from the moment of licence investment.
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IP-Licensing
Equity Royalty |
Equity-Royalty
IP-Licensing Asvantage |
The offer of secured equity form is made with the aim of
providing no-risk securement of the investment for the technology licence
owner in that
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by offering Preferred Shares
the net share-value is secured by the cumulative-value of the royalty
otherwise accruing from the agreement;
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by making it convertible the licence owner gets to enjoy the
appreciation in the under-lying valuation of the company should the
technology owner wish to
exercise the option of conversion to common Shares; and
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by making it callable
the value of the royalty accumulated gets to be paid to the licence owner in some future
date should the licence owner choose not exercise the option of conversion or
chooses only to exercise partial conversion while still getting back the
invested principal.
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Equity Royalty
Implementations |
Merger of Trust and Licensee
Venture
Trust Licensee Merger is the most preferred by the beneficiaries of
Trust-IP owners as it gives the equity position in the licensee,
effectively turning their IP rights into equity rights. This option
of licensing is also often the offered when prospective licensees
are not well-funded as to meet the licensing financing needs.
Partial Licensing
Hybrid of the preceding Simple Trust-IP licensing and the Merger
Licensing options, this approach is often the choice for new
ventures because it enables the Trust Beneficiary Investors to both
exchange some of the invested capital for equity while also being
protected from venture failure, as with failures they are able to
recover the licence for re-licensing to another venture of the same
industry. |
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