- Templum Markets, an issuance and trading platform for digital securities, and IPwe, a patent transaction platform, are partnering to offer create digital securities for patents and patent portfolios.
- It’s the latest example of securities that offer partial ownership of assets previously considered too illiquid to trade such as buildings, art portfolios or soccer teams.
Add patents to the list of assets once believed to be too illiquid to trade now getting the digital treatment.
Templum Markets, an issuance and trading platform for digital securities, and IPwe, a patent transaction platform, announced a partnership on Wednesday to create digital securities for patents and patent portfolios. The idea is to help companies looking to finance their patented intellectual property while giving investors exposure to assets that have historically been off-limits to them.
“They are largely untapped or locked away on that balance sheet without the pathway to continue to accelerate it. So we can take an untapped asset like that and bring it a level of visibility,” Vince Molinari, CEO of Templum Markets, told Business Insider in an interview. “I think you are really creating what becomes a new pathway as an investable asset.”
Digital assets, also known as digital securities, smart securities, or security token offerings, offer partial ownership of assets previously considered too illiquid to trade such as buildings, art portfolios or soccer teams. They differ from initial coin offerings, which rose in popularity in 2017 before drawing a wave of subpoenas, in that they have stricter regulatory oversight and are tied to actual assets.
With the fall of the ICO market, digital securities drew increased attention in 2018. However, the market is in a nascent stage, with only a handful of launches last year. One of those was the St. Regis resort in Aspen, Colorado which raised $18 million through an issuance that Templum Markets helped facilitate.
Templum Markets aims to serve as an all-in-one offering for digital securities, Molinari said, with a focus on larger, more prestigious assets and Wall Street investors.
It will help to raise financing from accredited investors, issue the token as a registered broker-dealer and offer a secondary trading market through its alternative trading system. Templum Markets can guide a company throughout the entire life cycle of the digital security, from its inception to eventual trading, which makes it different than other firms which specialize in one specific part of the process, Molinari said.
Molinari said partnering with IPwe and CEO Erich Spangenberg, who previously founded a platform helping companies make money off their patents, was key to gain access to Fortune 50 companies and their patent portfolios.
“We feel very fortunate to have that level of deep knowledge to combine with our regulatory distribution, our processes around smart securities,” Molinari said, declining to mention what large companies Templum is partnering with.
In a recent CNBC article, Spangenberg estimated that while as many as 80% of patents likely hold no value, the remaining 20% represent a potential goldmine. According to data from the World Intellectual Property Organization an estimated $180 billion in annual patent value comes from only 2% of all patents. Spangenberg himself invested $1,000,000 in software patents that are now worth $150 million, according to the story.
Spangenberg’s activity in the world of patents haven’t won the favor of everyone, though. Some have labeled him a patent troll, alleging his acquisition of patents is only meant to get a payout from companies it claims have infringed upon it.
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Patent or patent portfolio can raise anywhere from $25 million up to $250 million, Molinari said. The first offering will look to launch by the first quarter of 2019.
The structure of the contracts will vary, with some focusing on the licensing portion of the patent while others will be around an equity stake in it.
Thus is the benefit of a digital security, Molinari said, which can be customized however the issuer likes.
“The ability for it to really be the ultimate structured-product vehicle,” Molinari said. “I don’t think it is going to be one box fits all.”