In its latest edition, the well-regarded Intellectual Asset Management Magazine publishes an article by Zacco’s Anders Arvidsson and Margareta Ydreskog.
The topic of the article is raising capital through patents in Europe, with a strong focus on how patents should be valued in such situations. European investors generally have a limited understanding of the value of patents. A major challenge is therefore to provide a credible and appropriate valuation before the investor.
Typically, the value of a patent as written in the balance sheet of the company is based on the cost of obtaining the patent. However, an investor is most of all concerned with the future revenues of the patent in relation to risks related to the patent. Consequently, for a valuation to be of any greater relevance to an investor it should take into account factors such as risk of infringement, design around and validity, competing solutions, revenues, growth, as well as expected duration of the product protected by the patent.
Read more in the full article, which can be downloaded as a PDF below.