Interview Published May 4, 2000|
Nir Kossovsky, Patent & License Exchange
Nir Kossovsky is the founder, chairman, and CEO of Pasadena-based Patent & License Exchange (http://www.pl-x.com). I spoke to him a bit about his company and the market he's trying to serve.
BK: Where did you get the idea behind the Patent & License Exchange, and why did you decide to turn it into a business?
NK: The Patent & License Exchange (www.pl-x.com) was the offspring of two forces. First, as a successful inventor on the faculty of the University of California, I was disappointed by the University's underwhelming efforts to license my technologies to commercial developers. I saw significant value destruction and experienced the pain personally. That pain enabled me to envision a pain reliever -- a market for intellectual property. Second, as an intellectual property management consultant, I was disappointed by my clients' inability to license out technologies, or to acquire technologies for their product pipelines. The universality of the pain enabled me to recognize that the pain reliever could be offered on a commercial scale as a business - the safest market in the world for intellectual property: pl-x.com.
BK: What's your background, and how did you end up founding pl-x?
NK: The vision for a safe commercial market for intellectual property had to be translated into a business. Working with my long time business colleague and now President of The Patent & License Exchange, Bear Brandegee, we began researching aggressively the business space and outlining the elements we thought were necessary to create a viable market. We quicly understood that a key success factor for our intellectual property market would be risk reduction, and we sought to create alliances with key insurance and assurance experts: Ernst & Young, LLP (www.ey.com/corporatefinance/ip), Swiss Reinsurance Company (www.swissre.com/e/newmarkets/ourbusiness/traditional/intellectual.htm), and Chicago Title Company. The last part of the business model fell into place when we recruited Alex Arrow, a securities analyst and now CFO of The Patent & License Exchange, who helped us recognize that intellectual property was, in financial terms, a real option. From there, it was relatively easy to create decision support tools and price discovery mechansism to support a robust market that adhered to the rules of other disciplined financial markets.
BK: How has your company been received so far, and where are you in your company's development?
NK: The Patent & License Exchange is pain reliever in a market where the opportunity cost (pain) is approximately $2.9 Trillion. We have been very well received.
BK: How long did it take to take your idea and receive your first round of funding?
NK: The founders provided seed funds to demonstrate the market's support of the safest and most robust transaction-oriented intellectual property marketplace in the world. Within weeks, we closed our first strategic alliance with Swiss Reinsurance Company, closed our first round of Friends & Family funds, and recieved a term sheet from our second round Series A Preferred strategic investor, Ernst & Young, LLP.
BK: What has been the hardest part so far of starting up pl-x?
NK: The hardest part has been staffing. We are a new financial market for the most valuable asset in our knowledge economy: intellectual property. We seek the rare individual who is saavy in finance, intellectual property, science, technology, and general business.
BK: What sorts of people? Patent lawyers, technology transfer types?
NK: Our strongest candidates tend to be securities/financial services industry analysts who have covered technology-intensive industries; management consultants from the top-tier international firms, and corporate executives who have worked in technology-intensive companies and have had strategy/M&A/and international experiences.
BK: What are the biggest challenges you face now in taking pl-x to the next step?
NK: The next challenge will be launching our suite of decision support tools that will provide valuation and risk metrics for intellectual property assets.
BK: Finally, how difficult have you found starting up a business here and attracting capital here in Southern California?
NK: Pasadena is an ideal location for us. This Southern California location places us within the greatest center of intellectual property in the United States and within easy reach of both our European and Asian markets. The climate and relative affordabilty (compared to Silicon Valley) enables us to recruit from an international pool of candidates. Last, as smart capital is indifferent to borders, we had little difficulty attracting a $30MM investment from a sophisticated global syndicate including TMCT Ventures (the largest fund in Southern California), Softbank Finance Corp. of Tokyo, Itochu Corp of Tokyo, Barings Private Equity Partners from Hong Kong, STI Ventures from Tel Aviv, Polytechnos Venture Fund from Munich, etc.
Copyright (c) 2001 by Benjamin F. Kuo. All rights reserved.
May not be reprinted without permission.