Ok, you licensed your IP and now you have an expected royalty stream for several years. You can sit back, relax and wait for the check to come in the mail every quarter or so, or you can monetize your royalty stream to get a lump sum payment now.
In monetizing your royalty stream – you get a guaranteed pay back – instead of getting smaller payments over a period of years. In short, you get less money, but it is risk free and immediate.
You can monetize either all or part of the stream. It is negotiable.
Monetization of royalty streams are increasing. According to Technology Transfer Tactics from 2000 to 2003 there were a total of about $500 million in royalty monetizations. In the last 4 years there have been $5 billion in royalty monetizations – a 10 fold increase.
Why Monetize Your Royalty Stream?
The key benefits are reduced risk and immediate use of capital. You never know what could happen to the Company paying you the royalty and you get your money now and you can use it now.
Typically, most monetizations occur in the pharmaceutical and medical fields, but this is changing and monetizations are moving into other fields as well.