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Supporting a Capital Raising

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Raising equity is a common dilemma for early stage and high-growth companies with few tangible assets. Losses caused by investment in R&D and marketing together with a weak balance sheet can result in awkward conversations with potential investors. During the last year, we have helped half a dozen companies communicate the value of their IP and early stage business to investors.

An interesting case involves a small mining equipment company with a patent portfolio protecting technology that enables the exploitation of shale gas and geothermal reserves that had previously been uneconomic. Although the technology was only at the prototype stage, its benefits had been sufficiently well proven to attract the attention of an investment bank and international oil developer.

Our IP valuation report provided the potential investors with confidence in the economic strength and value of the company’s core asset: its patent portfolio. Our client believes that the valuation report was instrumental in securing a minority investment for $40 million.

The contents of the valuation report improved the line of sight between the vendor’s IP and future earnings by:

  • Comparing the client’s mining equipment to alternative technologies.
  • Describing the patent portfolio and the protection that it gave the differentiating features of the client’s products.
  • Assessing the size, growth and competition within the target markets.
  • Describing the relevant patent landscape, showing other inventions in the same area of technology and potential licensees.
  • Providing a Tech Rating that quantified the earnings capability and risk profile of the IP.
  • Expressing an opinion on the market value of the IP, disclosing the valuation methodology and assumptions.

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