“We are bouncing off rock bottom and the market is in recovery mode,” say leading IP dealmakers 17 May 16
A couple of stories hit the news last week which might give some in the patent industry reason to hope that the market is beginning to turnaround. First up was the announcement that Erich Spangenberg was joining Marathon Patent Group as director of acquisitions, licensing and strategy.
As Marathon announced the appointment, the IPNav founder made some pretty big comments about the patent market. He declared that there was now a historic opportunity in large part because of the turmoil affecting valuations that had put a lot of large-scale monetisation plans on hold.
In a follow-up email to this blog, Spangenberg provided more detail. “I believe we are at or near the bottom of a very significant repricing of the patent asset class,” he wrote. “As a result, prices have declined, patent owners have become even more desirous of pursuing value creating strategies and new strategies will be deployed.” In short, there are opportunities out there – enough to bring him back into the market, having generally been on the sidelines for the last 18 months or so.
The second story attracted less coverage, but may also support a broader thesis about recovery in the market as investors regain an appetite for IP. On Thursday Finjan, the cyber security company that has an active licensing business as well as an evolving product arm, announced that it had done a $10 million equity fundraising through a fund managed by Halcyon Capital Management and Soryn Capital. Halcyon is a global investment operation with $10 billion under management, so its Finjan investment hardly puts a dent in its coffers; but the fact that a fund of its size is willing to make an IP-heavy play at all is notable.
For Soryn, though, the deal represents a big feather in its cap. The business was founded by former Kirkland & Ellis partner Michael Gulliford; he then brought on board former InterDigital executive Fatih Ozluturk. Up to now, the firm has perhaps been better known for its advisory services to operating companies and for its venture with Liquid Venture Partners, so taking part in a fundraising alongside someone like Halcyon is a considerable boon.
When I caught up with Gulliford yesterday, he was limited in what he could say about the Finjan deal specifically, but he did reveal that the fundraising is symptomatic of greater investor interest in the IP sector. "There are extremely savvy, deep pocketed funds out there, a number of whom are co-investors of ours, who think that IP investments can be very interesting,” he commented. “There’s definitely more interest in uncorrelated opportunities that investors can put resources into.”
That growing interest is coinciding with a strategic shift in operating companies. "We talk to many IP department heads at large companies and a common theme in those discussions is the IP side of the business telling us that they are hearing more and more from the folks on the business side saying something to the effect of "we’re spending all of this money on patents but where are the returns?”,” Gulliford revealed. “And these entities, many of which are companies you wouldn’t think of as traditional monetisers, are looking for partners for deals, particularly to help with the balance sheet issues that arise when a company has to litigate."
Like Spangenberg, Gulliford enthused about the opportunities in the market, claiming that it had hit the bottom and was now in recovery mode. It might take more than a couple of stories like these to convince some that conditions are improving, but there’s definitely a growing sense of optimism.
Register for more free content
- Read more IAM blogs and articles
- Receive the editor's weekly review by email