The method of using IP assets to raise funds has slowly been growing on  bankers and business executives alike.  In a knowledge society, small and mid cap enterprises need financing, and the only assets to use as collateral are intangible ones.  Fortunately, the world is accepting the idea that intellectual property is more than just a legal right and a burgeoning article of trade.  It is also a means for financing an entrepreneurial venture.  The concept is not completely new.  The film industry has employed a unique financing model based almost wholly on the use of copyrights and royalties as collateral for funding.  Still, as intellectual property continues to become a formidable asset class, more financiers are listening to companies in different markets.

WIPO has finally realized that intellectual property is a legitimate source for securing financing, and has planned a meeting in Geneva to discuss the matter.  Today, WIPO released a statement announcing its March 10th meeting, the relevant part of which reads as follows:

The ability to use IP assets - copyright, patents, trademarks, designs - as collateral, particularly for small and medium-sized enterprises which depend on know-how and IP assets to bolster company value, is of growing importance. Using untapped intangible assets to secure finance is all the more crucial for companies in the current economic environment.

Global commerce in IP assets has expanded in recent years across a range of industries. Intangible assets are estimated to account for the bulk of corporate value today. However, the financial potential of IP assets has yet to be fully realized, largely because systems of financial accounting remain primarily tailored to tangible assets. The continued growth and success of IP financing hinges on legal and regulatory support, the awareness of the banking industry and sophistication of capital markets. Unleashing the full potential of IP financing offers an opportunity to boost business growth, innovation and creativity.

The information meeting aims to raise awareness within the intellectual property community, including creators and rightholders, as well as the wider financial services community, of the opportunities and challenges of IP financing. It will examine current practices in different countries and different industries, including in the copyright, patent and trademark fields. The meeting will highlight the ways in which improvements in law and financing practices may assist right holders in maximizing the value of their IP assets.

Things are looking up.  The more we discuss the issue, especially on a global stage, the better chance we have to tackle the inconsistencies that have accompanied the bull-rush of opportunities being provided to the corporate world by intellectual property.  From a global perspective, standardization and generally accepted methods of business, accounting, and valuation will be important to fight friction in transactions. I certainly wish I could be in Geneva on March 10!

For another opportunity to learn about IP financing, there is an educational conference call on the issue open to the public (for a price).

This entry was posted on Thursday, February 5th, 2009 at 4:32 pm.
Categories: Investment Intelligence, Portfolio Potential ~ by Ian McClure.

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