Intellectual property can generate financial returns

September 27, 20224 min read
Intellectual property can generate financial returns
Share on facebookShare on TwitterShare on Linkedin

Key takeaways

  • Intellectual property (IP) has historically produced revenues for owners via cash flow from securitization and royalties, as well as through capital appreciation following the increase in value of the IP portfolio.
  • As these assets can potentially appreciate and can generate cash flow, they can be an attractive investment opportunity.
  • Yieldstreet is offering access to a well-known industry player that has been long investing in intellectual property.


Licensing is the transfer of a right to use intellectual property to a third party, in exchange for royalties. 

The licensing of patents and other intellectual property assets is a traditional way to monetize from IP rights, and has become an increasingly lucrative and effective method of establishing and retaining market advantage. Indeed, companies tend to license non-core intellectual property assets to spread the costs of upfront investments on research and development or because they may require that technology/patent for their own products – firms in certain sectors such as healthcare or technology can be overly reliant on previously-patented assets.

Licensing agreements offer substantial flexibility in determining the scope of permitted use, and can be tailored to match the expectations or needs of the parties by not offering either too much or too little access to a licensor’s intellectual property. 

Thus, licensees should clearly identify their intended uses of the IP portfolio before entering negotiations and ensure the licensing agreement clearly authorizes them.


Securitization is the process of pooling and repackaging of homogenous illiquid financial assets into marketable securities that can be sold to investors. Historically, securitization tends to be possible with assets that have stable and fairly consistent cash flows, as well as availability of a large, diversified portfolio of similar assets. 

When it comes to patents, research and development (R&D) can be extremely expensive. Through securitization, companies that are R&D intensive can quickly realize returns and utilize the newly obtained funds to finance further research. 

Securities backed by intellectual property are valued based on the expected future earnings of the specific copyright or patent pool. The incentive for the IP owner to securitize is that it can offer swift access to collateral, which for many firms – especially startups – can be problematic at times. It can also potentially capture additional upside, as patent value can increase over time. 

IP owners retain equity, which means they can participate in the appreciation of the patent/copyright (most likely, a pool of patents) in excess of the interest paid, even as they lose control over the cash flow. Most importantly, because the loan is securitized, it does not affect the risk profile of the borrower. 
In an iconic past deal, in 1997, the English songwriter and singer David Bowie raised $55 million by issuing 10-year bonds backed by future royalties on several pre-recorded albums. The purchaser of the bonds gained the right to be paid the royalties from Bowie’s albums until the principal plus an 8% annual coupon was repaid. Similar deals were structured for other artists such as James Brown, the Isley Brothers and the estate of Marvin Gaye, with structuring fees of close to 10%.

Sale – License-Back transaction

An intellectual property sale/license-back transaction is an additional opportunity to monetize IP assets that have a high market value, for companies that are looking for liquidity. 

A company with an intellectual property portfolio can transfer it to a – most likely – wholly owned “Special Purpose Entity (SPE),” which then in turn licenses the intellectual property assets back to the parent company. Instead of leasing back, the SPE may also post the IP as collateral to get a loan from a financial institution, and use the loan proceeds to reimburse the parent company.

An investor looking into investing in any SPE used for intellectual property securitisation is likely to want to receive assurance that the transfer of intellectual property rights to the SPE can be legally enforced. 


A major driver of returns can be patent litigation. IP investors prefer to step in when there’s already been a patent infringement as it proves there’s value (if it’s been breached, it means someone wanted to use it) and as there is the potential to generate value from a settlement or a court judgment. 

A widely exploited investment strategy identifies a patent that is being infringed, pushes to launch an enforcement campaign, wins a settlement, sets up a licensing/royalty program, and then sells the patent to another entity.

Yieldstreet’s IP investment opportunity

Together with a well-known, large institutional investor, Yieldstreet has launched an IP fund with the goal of investing in patent portfolios to generate cash flow and take advantage of long-term appreciation.

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

300 Park Avenue 15th Floor, New York, NY 10022


No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and are willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Plaid, and Footprint and none of such entities is affiliated with Yieldstreet. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure