The Challenge

Three years earlier, a venture debt lender put $10M into a SaaS business with $30M in revenue. A private equity sponsor had invested tens of millions, and the business was meant to be a growth story. Three years on, it hadn’t grown and hadn’t repaid anything, and the lender was worried.

When asked what his security was, he pointed to the credit file: a couple of patents, four trademarks and software. He had even checked with ChatGPT, which gave the same answer. He wasn’t ready to commission a full valuation, but he wanted to know where he stood and asked whether there was a health check available.

The Approach

We offered an IPRSCORE™. We were introduced to the company and had it upload its materials to the data room. We then carried out the analysis and diligence and generated the score within a week, which is our standard turnaround.

The Results

The score was poor, and the diligence showed why. Two of the patents the lender believed he held as collateral had lapsed the previous year. Two of the trademarks had been transferred to another entity within the group, so they likely fell outside his security as well.

The lender’s reaction was to ask how he was supposed to have known. The honest answer was that he couldn’t have: he didn’t know the questions to ask, couldn’t tell whether the answers he was getting were right, and didn’t know who to trust on IP.

That gap is the real problem with IP as collateral. Lenders have little experience valuing it and have rarely seen IP value recovered on default, so they can’t easily tell what is registered, perfected and still held by the borrower. The IPRSCORE™ gave this lender an independent health check within a week and showed that some of the patents and trademarks listed as his security could no longer be relied on.