Investing in Syndication Shares
Why Would an Investor Buy a Share of a Patent Syndication?
The reasons why someone would buy a share in a Patent Syndication are many and varied and are similar to the reasons why someone would invest in a private start-up company or a company listed on a stock exchange.
Typically people invest in companies listed on the stock market to either generate an income (primarily through dividends) or for capital gains (through the increase in price of the share) or a combination of the two.
Investing in a patent syndication offers the shareholder the opportunity to generate an income through licensing and like traditional share investing, any announcement of market sensitive information relating to positive changes in the development stages of the patent, will deliver significant capital gains to all syndication shareholders.
Multiple Options for Investors through Patent Syndication.
The patent syndication system creates multiple new opportunities for investors to participate in including, a new untapped market for investors to utilize the market gap between the patent being published (un–granted) and the patent being granted by the patent office.
Patent syndication achieves this is by ensuring that patents that have not yet been proven in the market place start at a lower price per share when they are syndicated. This encourages as much demand and investor participation as possible and provides a significant potential upside reward through capital gains to the syndication shareholders (investors) once a patent is granted.
For investors it’s an ideal way to access varying types of patents at different stages of the patents’ life cycle that previously was off limits to most investors.
Depending on the risk profile and goals of investors Patent Syndication systems offers investors multiple opportunities and options including un-granted patents, granted patents and patents currently in force.
By opening up the un-granted patent market to investors, it provides an excellent avenue for investors across the globe to invest in patents that are currently waiting to be granted, that could go up in value by at least 2 – 6 times in price once the patent is granted, which can take up to 15 months from the publication date of the patent.
If the patent is proven in the market place through market demand, the patent has the potential to rise by around 10 times or more in value from the granted patent price valuation.
The added benefit of owning a share in a patent syndication compared to owning a share in a company listed on the stock market, is that each syndication share comes with the right for the shareholder to utilize intellectual property of the patent for their own benefit as well.
Other benefits of investing in a patent syndication also include;
- Investment diversification – The syndication shareholder can own a share in patents across different industries and in different countries or economic environments spreading their risk.
- New Investment Asset Class – Multiple types of Investors can now participate in un-granted market place for patents.
- Greater Flexibility – Syndication shares can be purchased in a patent that is granted or un-granted offering increased flexibility and options for investors.
- Low entry cost – Shareholders are required to acquire 1 share only to participate in the syndication.
- Ground floor opportunity – Investors are offered the opportunity to participate in patents at much earlier stage in their development commencing when the patent has been published and un-granted.
- High Investment Returns – Participating in patents as they progress through various stages of development allow investors to benefit from this transition, providing significant capital gains as the patent values rises as different syndication group’s milestones have been achieved.
- Level playing field – the profile of investors can range from professional investors or high net wealth individuals to retail type investors.
- Improved transparency– Patents will be more accurately valued to reflect the inherent value and risks associated with the patent. Demand from investors will grow for the trading of patent syndication shares as transparency improves with more accurate valuations.
- Improved liquidity – There is a greater number of potential investors able to buy a share of a syndication rather than the entire patent making it more tradable as more parties can participate.
- Reduced Risk – The underlying patent has reached the PCT status which means the patent owner has received the search results of an international search report and believes that the there is a good chance of patentability in each country.
- Tax Advantages: As a patent syndicate shareholder, the shareholder may be able to enjoy tax benefits under the tax laws of their country.
The Shareholders of the Patent Syndication.
The shareholders of the patent syndication can be but not limited to individuals, employees, investment entities, universities, small to medium enterprises (SME’s) or large or public companies who own a share/s in the patent syndication.
Syndication shareholders receive the right to utilise the intellectual property in the country of the syndication. This may be direct use of the IP or through the licencing of the IP to a third party.
Any costs associated with the filing and the ongoing compliance of the patent within the country is shared by the syndication shareholders in accordance with the patent syndication agreement.
If the Patent / Patent Syndication is sold in its entirety, any capital gain / loss is shared by the syndication shareholders in accordance with the patent syndication agreement.
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