What patents are used as collateral?—An empirical analysis of patent reassignment data

• We use novel data on patent reassignments with a security interest.
• With this data we explore what patents are used as collateral.
• Underlying technology characteristics matter for patent collateralization.
• Analyzed characteristics of the patent's exclusion right do not matter.

Only anecdotal evidence exists that ventures use patents as collateral to access debt financing. In this paper, we use a novel dataset on patent reassignments with a security interest to explore quantitatively what patents are used as collateral. We analyze characteristics of patents to disentangle whether it is the technology underlying a patent or the patent's exclusion right per se matters for collateralization. We do find empirical support only for technology-related characteristics, suggesting that lenders use patents to collateralize high-quality technology that can, in case of default, be redeployed to ventures in similar technology fields. On the other hand, patent-related characteristics like scope, which are, in general, related to patent value and are particularly important for non-practicing entities, do not matter.