Increasingly, companies are turning to intellectual property financing as a way of raising capital. IP-backed loans enable a company to raise funds without having to turn to venture capitalists. These transactions are relatively new and haven't caught on quite yet, but they do offer some significant advantages over traditional debt financing. Creditors need to consider some key issues when extending loans secured by intellectual property assets, such as collateralization and valuation. Collateralization Collateralized financing is a type of financing where an asset serves as security for the loan. The collateral can be related to the original transaction (as in the case of a budget loan for a new airplane) or unrelated (as in the case of a loan for the sale of oil receivables). For example, Xerox pledged patents as collateral when it faced financial distress in 2002 and Eastman Kodak pled its copyrights when it was hit with financial distress in 2014. Companies like Kingfisher Ai...
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