Cascading IPO Funding Structure for Startup Capitalization

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Solution Overview

Problem

Small or start-up companies face significant barriers to successful Initial Public Offerings (IPOs) due to high costs, lack of revenue, and expertise in regulatory and disclosure requirements, which disrupt their operations and performance.

Innovation Solution

A cascading funding platform using a distributed ledger system that links funding for a first company to subsequent companies, allowing a portion of the IPO proceeds to fund subsequent IPOs, with smart contracts ensuring payouts to investors and reducing upfront costs through a special purpose vehicle (SPV) and incubator firm management.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Quantity of substance

If a company pursues an IPO, then it can raise capital and achieve public market listing, but the preparation cost is prohibitive and the process disrupts company performance

Engineering Contradiction:

Improvecapital raisingVSAvoidpreparation cost

Core Design Contradiction:

Quantity of substanceVSDevice complexity

Solution Approach 1:

The patent introduces an intermediary entity (the IPO company) that acts as a mediator between the start-up company and the capital markets. This intermediary raises capital through its own IPO and then transfers these funds to the start-up company, thereby isolating the start-up from the direct complexity and cost burden of the IPO process while still enabling capital raising.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent segments the capital raising process into two distinct stages: first, the IPO company raises capital through its initial public offering; second, the IPO company transfers these raised funds to the start-up company. This segmentation allows the complex IPO process to be separated from the start-up's operational disruptions, as the start-up does not directly undergo the IPO process.

Inventive Principle:

Principle #1Segmentation

2Adaptability or versatility

If a company undergoes IPO process, then it can access public markets, but management attention and resources are monopolized, impacting company performance

Engineering Contradiction:

Improvepublic market accessVSAvoidcompany performance

Core Design Contradiction:

Adaptability or versatilityVSProductivity

Solution Approach 1:

The IPO company serves as an intermediary that assumes the management burden of the IPO process. By placing the IPO process in a separate entity, the start-up's management can maintain focus on operational productivity while still achieving public market access through the intermediary's IPO.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent divides the IPO process into a separate entity (the IPO company) that handles all the time-consuming regulatory and administrative tasks, while the start-up company continues its normal operations. This segmentation ensures that the start-up's management attention remains on productivity rather than being monopolized by the IPO process.

Inventive Principle:

Principle #1Segmentation

3Quantity of substance

If small companies seek IPO services, then they can raise capital, but they cannot afford the costs prior to security distribution

Engineering Contradiction:

Improvecapital accessVSAvoidaffordability

Core Design Contradiction:

Quantity of substanceVSEase of manufacture

Solution Approach 1:

The patent applies preliminary action by having the IPO company raise capital before the start-up company needs it. The IPO company performs the capital raising activity in advance, and then transfers these pre-raised funds to the start-up, eliminating the need for the start-up to bear the upfront costs of IPO preparation and security distribution.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The IPO company acts as an intermediary that assumes the financial burden of IPO costs. Instead of the start-up bearing the costs of preparation and distribution, the IPO company raises capital and transfers it to the start-up, making the process affordable for small companies that would otherwise be unable to afford the expenses.

Inventive Principle:

Principle #24Intermediary (Mediator)

4Adaptability or versatility

If a company focuses on IPO preparation, then it can achieve public listing, but sufficient revenue and profitability are not yet achieved

Engineering Contradiction:

Improvepublic listing capabilityVSAvoidrevenue and profitability

Core Design Contradiction:

Adaptability or versatilityVSQuantity of substance

Solution Approach 1:

The patent segments the revenue and profitability requirements into two separate entities: the IPO company is expected to achieve sufficient revenue and profitability to support its public listing, while the start-up company can focus on its core business without being constrained by IPO-related revenue requirements. This segmentation allows the start-up to pursue public listing capability without needing to have achieved sufficient revenue itself.

Inventive Principle:

Principle #1Segmentation

Data Source

PatentUS12548076B2Cascading initial public offerings or special purpose acquisitions companies for corporate capitalization

Publication Date: 2026.02.10 DESCHENAUX MARC R

AI summary

A computerized system with hardware and specialized software components for developing, executing and administering sale of securities for raising capital by an incubator financing company wherein a portion of the proceeds of the sale of securities is used temporarily to fund a subsequent company.