Research Institutions use the proceeds from IP structured finance to raise capital to build new facilities and hire new researchers. One way to view this transaction is as risk transfer, since this is a non-recourse instrument, meaning that if the royalties of the intellectual property fail to pay off the financing, alseTIP will not and cannot look at any other assets of the borrower from which to be paid.

For example, if the royalties from a financed university license dry up for whatever reason, we cannot look to any other assets held by the university for repayment.

Research organizations are generally quite conservative and want to be able to plan for the future. They do not want adverse events to alter their future cash flows. With IP structured finance, research institutions can be assured of future cash flows and be able to reapply those as they see fit.