Founded in late 2011, Carthage uses a set of novel, patented business processes developed by one of our partners to value and monetize revenue producing intellectual property. We have developed a new investment vehicle, similar to the sale/lease-back of real estate. This concept allows an company to raise capital without equity dilution or increased debt through the sale and license-back of its patent portfolio, with a valuation based on the revenue stream those patents protect.
A company receives cash in place of an often undervalued patent portfolio and a license to continue to use the technology; the investor receives a royalty stream with early capital return, sheltered by amortization of the purchased patent portfolio; and there is potential revenue sharing between investor and company from out-licensing, should this fit the company’s strategic needs.
This process is ideally suited for mezzanine-stage, private equity and venture-backed companies requiring additional, non-dilutive capital for expansion, management buy-out, or acquisition of technology from a third party. These companies often have an NOL to shelter any gains from the intellectual property sale, and payments are fully tax expensed as a license.
The cost of the financing is determined by a variety of factors, including the financial position of the company and strength and duration of the patent portfolio. Essentially, any company with a patent portfolio can be a candidate—not just high technology companies. Although the Carthage business processes are applicable to any technology, our partners have a specific expertise in software, electronic systems, defense electronics, aerospace, and manufacturing.