The tech party will come to an end soon says Silicon Valley’s undertaker, Marty Pichinson of Sherwood Partners and he is getting ready to party like its 1999. Pichinson expects a major hangover from all the wild investments that have been made that will amount to nothing.

Marty Pichinson understand startups in Silicon Valley better than anyone, since his company specializes in selling off their assets and unwinding their obligations when they fail. Sherwood has shuttered so many companies, most spectacularly when the big startup bubble burst in 2000, that it’s become known in the Valley as “the undertaker.”

In a recent interview he told Connie Loizos of peHUB that, his firm has become one of the largest sellers of [intellectual property] in the country. It has acquired so many patents by shutting companies down. Patents are fetching premium dollars after the Google/Motorola acquisition that was largely driven to secure patents. In contrast in the last downturn Pichinson was selling URLs linked to ideas behind them.

“We sell tons of IP, and as you know, the IP wars have started, so we play with the big guys, the little guys, and the in-between guys. During the last bubble, there weren’t as many patents”, said Pichinson.

He says the competitors of wound down start-ups are lining up to buy the patents in addition to big companies.

Sherwood Partners’ web site includes a whole page devoted to Intellectual Property Monetization, touting the company’s skill at finding partners who will buy or license patents from startups in trouble. In one case study, the board of a lifecycle automation software company with $65 million in VC financing determined they would be better off selling off their IP than seeking an additional round of funding. Sherwood maintained the patent portfolio for two months while it liquidated the company’s other assets, then sold the portfolio to a competitor.

In another case, a wireless tech company was able to license their IP (with Sherwood’s help) and stay afloat with help from the proceeds. Patents can make the difference between staying in business, closing the company at a profit to all investors, or closing it at a loss.

Pichinson says there is much over funding in clean tech, bio tech, social networking, clean energy and the party will end soon. He sees major job losses and declining housing prices as the worker flee Silicon Valley. Pichinson is getting ready to party for a long time while startups die.

Source: Wired