We focus on technology companies who have developed breakthrough innovations that can transform the manufacturing and use of physical products in an industry so that it is greener, more sustainable, or more efficient in ways that make economic sense. In selecting among these technology companies, we look for enabling IP assets based on deep science and engineering. These "IP assets" include the “brick and mortar” assets used to build new products that embody or use a company’s breakthrough IP, including new product designs, know-how and proprietary manufacturing equipment.  

We look for high barriers to competitors in developing competing solutions to these assets, including long development timelines, large capital investments, and complex problems to solve in developing a competing solution. These barriers ensure the highly differentiated value propositions a company delivers to its customers and partners will endure the test of time and have a lasting impact in the world; they also ensure company revenues and fund returns remain durable, thus reducing any correlation to the ups and downs of stock markets and the state of the economy that put equity investment models like venture capital at high risk.  

To further ensure the success of our investment strategy and mission, we also require our companies to have a portfolio of well-designed IP rights (patents, trade secrets, and other legal rights) and a protection strategy (legal, physical, and virtual, e.g., cybersecurity) or one that can be developed together with the company, to protect the IP assets from copying and unauthorized use and value impairment as they are shared for broad adoption with customers, suppliers, and partners through joint ventures, licensing, and franchising arrangements.

We look for breakthrough IP assets that also hold the potential to produce immeasurable ripple effects in the world when broadly adopted that will bring new opportunities to businesses and people everywhere — unlimited potential to benefit humanity — and that will inspire entrepreneurs to develop cascades of new innovations in applying these breakthrough IP assets to meet local needs, globally, and in other applications.

America's prosperity, its freedoms, and its global leadership — the  light that it shines on the world — have resulted from exactly this approach in ways that are unparalleled in history: in scaling broad adoption of breakthrough innovations in manufacturing new physical products, from planes, trains and automobiles to the telephone lines that connect our world, to the cellphones and smartphones in our pockets, to the computers and electronics in our homes and offices, to new medicines that save lives, to the Coca Cola that the world drinks.  

Before making an investment in scaling the use of a company's IP assets, we underwrite the value of those assets to ensure that the IP assets provide sufficient value coverage to mitigate any risks to our capital:

IP Assets. We underwrite the value of a company's new product designs, know-how and proprietary manufacturing equipment (the “brick and mortar” assets used in making new products with its breakthrough innovations), and the higher growth, higher profits that the IP assets can deliver  to others if sold or licensed, including to existing manufacturers and suppliers. We use a qualitative and a quantitative analysis in determining the value of a company's IP assets. This includes a risk analysis that evaluates the barriers to competitors developing a competing solution, including an assessment of the scope and quality of a company's IP rights (including patents, trade secrets, and other IP rights), and an assessment of its IP protection strategy (legal, physical, and virtual, e.g., cybersecurity) that will protect the assets from copying and unauthorized use and value impairment as they are scaled.

Contracts. We also underwrite the value of the company’s contracts with customers to purchase products that embody or use its breakthrough IP and the revenues those contracts will produce, as well as the company’s contracts with suppliers and partners that enable its business to operate.

Before making an investment in scaling the use of a company's IP assets, we ensure that the company has the necessary contracts in place and/or that other milestones will be met in the future that will produce durable revenues to support the cash yield and total returns that we expect to receive for our investment.

It is crucial that the entrepreneurs building a company that we invest in have strong core values and see themselves as stewards for the higher growth, higher profits their IP assets unlock, with a shared vision for scaling broad adoption of their IP assets to have a lasting impact in the world that includes delivering long-term growth in jobs and higher wages to their people and the communities in which they operate.

Once we select a technology company with breakthrough IP assets that we believe will be successful in delivering on the promise of our mission, we structure an IP Capital solution for scaling the use of its IP assets to meet customer demand and to lay a foundation for  broad adoption that will have a lasting impact in the world. Our capital commitment is structured for long-term growth so that a company has the capital it needs now and the capital it anticipates it will need in the foreseeable future to scale its manufacturing capacity and operations to keep up with customer demand and deliver on its commitments to customers and to us.  

Our committed capital is gated in as contracts are signed by customers or other milestones are met that will lead to durable revenues. We do not rely simply on the projections in a company's business plan.
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Our capital is secured by the value of the company's IP assets (including its new product designs, know-how, and proprietary manufacturing equipment) and its contracts, and by the value of its IP rights (patents, trade secrets, and other IP rights) that protect the IP assets from copying and unauthorized use and value impairment.

We receive a percentage share of a company’s revenues ("revenue share" or "IP royalty") in return for the capital needed to scale manufacturing capacity and operations and use of its IP assets:

Equity ownership and control remains in the hands of entrepreneurs. Our revenue sharing approach frees entrepreneurs from having to depend on equity financing solutions and allows them to choose if and when to exit through an IPO or sale of the business. This is in contrast to venture capital and private equity which force a company exit to meet fund mandates on exit timing and returns.

Investors receive a cash yield from the revenue share. By receiving an IP royalty, or percentage of a company's revenues, rather than equity ownership, we no longer have to wait years to see returns. This better aligns the interests of entrepreneurs and investors and reduces the investment risk.

Investors still participate in the upside of a future company exit. We receive a percentage of a company exit to buyout our future IP royalty payments OR we can sell that IP royalty interest to others.

By receiving an IP royalty as a percentage of a company's revenues in return for the capital needed to scale the use of its IP assets, we are able to provide our investors with an IP return in the form of a dividend, paid quarterly, that provides them with a cash yield over the course of the investment and a total return in an exit event, whether a future company exit (IPO, sale) or a fund exit that sells the revenue share to others.

‍Determining the IP royalty % in company revenues:
The revenue share percentage that we use is selected to return over 5 years an amount equal to one times our invested capital using conservative revenue expectations and designed to enable us to provide our investors with a 12%-15% average annual cash yield, net of our profit interest, with the cash yield each year ramping up with revenues, from a target low of 5% in early years to 20% or more in later years.
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Determining the IP royalty buyout % in a company exit:
‍The IP royalty buyout percentage that we use in a future company exit (IPO, sale) for relinquishing the Fund’s revenue share is selected to return a minimum total return of a 2x net multiple, 20% IRR to investors.

The upside potential beyond the minimum return is unlimited because the IP Capital investment model is focused on scaling broad adoption of a company's IP assets, including through joint ventures, licensing, and franchising arrangements. Broad adoption enables a company to have greater impact in the world, more quickly, creating more value for more businesses and people and higher growth in revenues for the company, providing investors with the potential for even higher returns and a lower risk profile.

We provide IP management, technology, and operations support to protect, optimize, and scale the use of a company's IP assets to support broad adoption, and we bring a shared technology platform for integrating smart manufacturing into the company's operations to optimize performance, efficiency, and profitability.