The often-overlooked aspect of traditional startup scouting is the relationship between startups and financial institutions, particularly manifested through patent transactions. However, this information carries substantial relevance and is even readily available in the USPTO Patent Assignment Database.
Startups that engage with financial institutions, especially by utilizing their patents for loans, are not only demonstrating their growth potential but also their openness towards external partnerships and collaborations. These actions form a significant part of their developmental journey and often serve as precursors to future partnerships. Moreover, the fact that banks approve loans based on patents proves their belief in the company’s technological capabilities and projected return on investment.
In this article, we explore the lesser-known ways of scouting startups by reviewing patent transaction types as contained in the USPTO Patent Assignment Database. Knowing these conveyances allows you to assess an organization’s patent portfolio for collaboration, acquisition, and sometimes even financing.
Let’s dive right in. Shall we?
Startups involved in the transactions with the banks and what they signify
| Transaction | Execution date | Borrower | Lender |
|---|---|---|---|
| Security Interest* | Jun 29, 2022 | Scriptdrop | Celtic Bank |
| Notice Of Grant Of Security Interest* | Dec 16, 2022 | Cybercube Analytics | NHTV Chronos Holding |
| Mortgage* | Mar 28, 2017 | Agrisoma Biosciences | Gestion Manuia |
| Lien* | Feb 19, 2019 | Lumativ | Onshore TechnologiesJeffrey Mackay Legendary Holdings |
| Security Agreement Supplement* | Dec 9, 2022 | Paragon 28 | Midcap Financial Trust |
Security Interest:
Scriptdrop Granted A Security Interest To Celtic Bank Corporation. This transaction is a legal agreement between a company and a lender, where the company uses its patents to guarantee a loan. It grants the lender a special right to the company’s patents as collateral. However, it’s important to note that the lender does not become the owner of the patents through this agreement.
Such a transaction can point to the startup’s need for finances to invest in the R&D. This type of deal can also hint at which startups are open to teaming up with others or possibly being bought out.
Notice Of Grant Of Security Interest:
Cybercube Analytics, Inc. obtained a notice of grant of security interest from Nhtv Chronos Holding Llc, As Agent. This transaction is a notice that is sent to the patent office to let everyone know that someone else has a special right to a particular patent. It’s an important notice because it tells potential buyers that the patent is being used as collateral for a loan or another financial arrangement.
The patented invention involved in the above case relates to a Method And System For Monitoring A Network Resource. Similar data can be used to monitor the activity of startups and explore other patented technologies by them.
Mortgage:
Agrisoma Biosciences Inc. assigned certain rights to Gestion Manuia Inc. A patent related to the Production Of Modified Fatty Acids in Plants was involved in this transaction. It is a type of security interest where the lender can hold and sell the property to recover the debt. These are not strictly patents but can include other properties like copyrights, trademarks, etc.
Following this transaction, we observed the company’s R&D growth concerning biofuel made from oilseed. By finding deals like this, we can track what new technologies startups are creating and where they focus their resources.
Lien:
Onshore Technologies In, Jeffrey Mackay, and Legendary Holdings registered a lien on a patent held by Lumativ. This means that if the borrower fails to fulfill its obligations, the priority lien holder has the first right to recover its interest from the assigned patent. However, it does not transfer ownership of the patent to the lienholder.
At times when inventors place a lien on a patent, it can denote that they are in dire need of funds. Further investigating this startup, we saw that it later sold the patent to Legendary Holdings to raise funds. Such statistics reveal startups that may be up for acquisition.
Security Agreement Supplement:
Paragon 28 Inc. agreed on additional security with Midcap Financial Trust, using their patents and other intellectual property as collateral. It refers to an additional document that modifies or adds to the terms of an existing security agreement in relation to the security interest in a patent.
This particular supplement builds upon a previous Security Agreement made in May 2021 between the two parties. This move seems to have worked, as they’ve seen a 23% revenue growth between 2021 and 2022, even though they struggled in 2020.
Having launched innovative solutions in the past year, it is safe to say that the company has been using its IP as a loan for its commercial growth.
Conclusion
USPTO Patent Assignment Database is an easily accessible tool, but the real magic lies in how we interpret and use this wealth of information. The above information is not the only deciding factor in startup scouting. Still, our experts can narrow down their research and even provide more concrete information on the startup’s activities with transaction data.
It’s important to note that the insights provided here don’t independently dictate startup scouting. However, they equip our experts with a targeted direction for their research, offering refined, detailed knowledge about startup activities.
The journey to collaborate with or acquire a startup is often long and winding, but remember, you don’t have to navigate these waters alone. While you may feel overwhelmed by the magnitude and complexity of these insights, our expert guidance can streamline your decision-making.
To top it up, working with us isn’t long and winding.
Authored by: Jogeshwar Singh, PDT
Edited by: Annie Sharma, Editorial Team
