IV touts good returns, but one public source reports returns as poor as -70 percent.
by Joe Mullin
Patent-holding giant Intellectual Ventures (IV) has been making the rounds seeking investors for a new patent-purchasing fund, according to a Reuters report.
The company is apparently out of money, having spent the $6 billion it has raised since its inception in 2000. For the time being, it has stopped buying new patents.
According to the material IV gave to prospective investors, which were reviewed by Reuters, the company has achieved average return of 16.2 percent on the first patent fund it put together, in 2003. Its second fund, completed in 2008, has achieved an average of return of 2.5 percent.
Those numbers seem somewhat questionable, though, in light of one of the few publicly available sources of IV returns. The University of Texas Investment Management Company, or UTIMCO, was an early investor in IV and is required by law to disclose its annual returns. UTIMCO invested $50 million in IV's 2008 fund, but the value of its stake has decreased by about four percent, making it the fifth-worst investment that investment group made in 2008.
UTIMCO's investment in one IV fund, the Invention Development Fund, has been a disastrous 70 percent loss.
Several of the companies that once teamed up with IV on its first round of investment can surely be counted on not to join up this time. Google and Xilinx, for instance, both joined up with IV a decade ago when it had positioned itself as a kind of "patent defense fund." After accepting their cash, IV has actually sued both Xilinx and Google (through its Motorola division) for patent infringement.
Microsoft, an early IV backer which continues to have some ties to the patent-holding firm, told Reuters it has not invested in the new fund "at this time." Intellectual Ventures was founded by Nathan Myhrvold, a former Microsoft CTO.
Intellectual Ventures refused to discuss the new fund-raising activity.
For many years IV eschewed lawsuits, but it began filing them in 2010. This year IV has expanded the scope of its lawsuits, suing more than a dozen banks, including JP Morgan Chase, Bank of America, and BBVA Compass Bank.
Courtesy: arstechnica
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