How to Turn your Patent Rights into Dynamic Self-Funding Securities: The Innovative Art of Converting Scientific Assets into Monetary Value
A tried-and-true story of tactically converting scientific assets into self-funding securities by leveraging law-protected privileges provided to legitimate inventors (by the national authorities) – in order to never need an outside investor again – FOREVER.
HOW TO CONVERT DORMANT SCIENTIFIC ASSETS INTO SELF-FUNDING SECURITIES:
One of the major issues inventors from all fields of sciences struggle with is the pressing problem of sustaining the financing of their innovative workflow. Even for those of us who are blessed with marketing and persuasive abilities, it is still a tough challenge to continuously find investors who fully acknowledge the risky notion of contributing financially to any given R&D project; especially if it is a pharmaceutical or bioceutical one. As a result, the dream of many scientists is to be able to be self-sufficient when it comes to financing their research: this was my goal, and I would gain much experience while undertaking this journey.
So please, allow me to share my story regarding my quest and how exceptionally well my team and I managed to achieve a patent-based self-funding model.
A little context: we were a medium sized R&D group that produced 300+ patented bioceutical formulations and methods of synthesis & obtainment for synthetic and herb-extracted compounds respectively. As many other non-commercial R&D groups, our sole income was essentially selling partial shares and issuing exclusive licenses. It was challenging for a research team of 46 to simultaneously self-sustain their monthly expenses yet also fund their research.
The main problem was that our investors were not scientists, but instead merchants who only cared about the potential lucrativeness of our patented projects and each patent’s financial ROI (Return On Investment), essentially comparing our scientific patents to mere real estate projects. Generally, one can accurately pinpoint how much money a real estate development can make, making investors highly attached to the security and definite ROI that real estate investments offer. This is contrary to our output, which is hit-or-miss: our patents or projects may prove to be either extremely profitable or fruitless. This fundamental misunderstanding of the investors and our inability to communicate the nature of patent investing would be detrimental to the finances of the investors, and our own ability to conduct research.
Such natural, hit-or-miss risk almost always caused problems on both sides where our investors earned more than they initially self-projected or less than that; causing much fallout. Most of the time, the investors were unprepared to deal with or misunderstood the consequences of their financial undertaking, while my R&D team and I were wholly dependent on the investors to fund our business lifestyles; this unhealthy dynamic caused many blistering debates and unnecessary conflicts which were disheartening and unfortunate for both sides.
Due to these reasons, pharmaceutical and bioceutical R&D projects are primarily funded by our government instead of the private sector (despite the vast potential of Turkey’s private sector), but are merely first choices due to the reasons listed above. However, the private sector will hopefully become a larger player in the near future thanks to our government’s effective encouragement regarding the domestic private sector’s contribution to national R&D projects.
As I desperately looked for solutions, I came to learn that the highest valuation authority (which would determine the value of nationally approved patents and patent applications) was the National Trade Courts. My team and I then chose 6 of our best patent applications and requested a formal valuation for them from 7th Trade Court of Bakirkoy. After 10 months of technical sufficiency investigations and non-disclosure agreements with the appraisers and countless other events and meetings, those 6 patents were found to be worth 86 million Turkish Liras of Value (over 9.68 Million USD, as of 2021) in value. This one event changed virtually everything for us. Now, we were suddenly able to self-finance and even serve as a collateral providing company for teams who require such aid in order to finance their own R&D projects.
Nowadays, despite the current economic situation; thanks to Turkey’s No. 6750 Securities Collateralization Act, all non-real estate in-kind assets like patents, mining licenses, energy project registrations and many other values that were not recognized as banking collaterals are now state approved for such usability. This further increased the practical value of our patents.
We were the first to use a patent application (not even an approved patent!) as a bank collateral, and it was before the state passed No. 6750 in the Securities Collateralization Act. With hundreds of our patents in our portfolio, we have acquired a projected value of roughly 20 billion Turkish liras (over 2.25 Billion USD, as of 2021). The projection was taken from 6 valued patents, including an anti-carcinogenic, an anti-inflammatory, an anti-depressant, a pro-somatotrophic, a hypothermic and a pro-dopaminergic formulation patent.
Next came the patents’ usage as public debt and commercial debt collaterals, so we finally introduced them to the Istanbul Stock Exchange. We officially attached the patents to a bioceutical R&D company formed from our group, and after our Market Regulatory Council approved the company valuation we conditionally sold the firm to a listed company, thus entering the exchange. Sadly, it did not go as well as expected due to our poor choice of partners and inexperience regarding stock market operations. However, our main objective was to have national drug patents approved and introduced via Turkey’s national stock exchange and so, in that light, it waswell worth it. After years of hard work, we managed to convert drug patents into full scale financial assets, and all while following the laws and regulations of our country.
Even after all these domestic achievements, we were more surprised to learn that these court valuations are readily accepted as valid in many countries and are accepted as in-kind capital additions to a given company. This made us realize how efficient and solid it would be to use any patent – not just drug patents, but also national defense projects, engineering design trademarks, etc. – as basal collaterals for leverage operations performing cryptocurrencies and great assets for company and entity tokenization. In fact, with a given pharmaceutical or bioceutical patent portfolio, it is estimated that if 1 or 2 out of 40 patents were finalized as drug registrations they will possess a value much greater than the entire portfolio itself. As their value is dependent upon their scientific extent rather than projection-based values like discounted cash flow and their potential profits or fruitfulness, patents are the supreme choice to be used as firm & reliable collaterals for hyper-dynamic cryptocurrency trades; providing at least a partial protection as a collateral for an extremely risky leverage operation.
In addition, we firmly believe in the near future that the world may witness acquisitions of vast magnitude performed by many cryptocurrency exchanges to provide reliable in-kind guarantees for their clients, just as we may simultaneously witness the exponential rise of tokenization which seems as the inevitable benevolent consequence of above mentioned cascade.
We hope you enjoy our perspective. Best
Erdal Can Alkoclar & Metehan Yesil