Use of Intellectual Property to Create a Strategic Advantage
About 30 years ago, it was common for a company’s founder to enter their banker’s office with a file of financial statements, a brick-and-mortar location and heaps of contracts for future purchases. But, as time advanced and thanks to the Internet of Things, the thought of such practices only makes us laugh. As an era shifts from horse and buggy to automobiles, so does innovation makes our focus shift from tangible to intellectual assets.
Innovation is primarily correlated with value creation through industry-disrupting technologies, business models or products. Intellectual Property (IP) plays a critical role in driving innovation and economic growth. With this knowledge-based capital increasingly becoming an important source of economic growth worldwide, companies are scaling up their requirement for access to capital and market to monetize their intellectual property (IP) for business growth and expansion.
Intellectual property (IP) can be narrowed down to “Informal” and “Formal” IP. Informal IP, often referred to as a “company’s know-how,” includes intangible assets such as branding, supplier relationships and business process. Informal IP must be well articulated to demonstrate its value bankability. IP finance is almost always reserved for formal IP such as trademarks, patents, copyrights and design rights.
Companies must look to calculate intellectual property into their overall business plans and corporate value proposition to ensure long-term economic success. Four basic structures could be used to monetize the value of the intellectual property: IP-backed loans, IP sale-leaseback, IP legal finance and IP royalty securitization.
The securitization of these IP assets opens the credit markets for “hard-asset-light” services for businesses needing asset-based financing. Recapitalization through IP finance can increase liquidity for investment in projects with returns that outpace the cost of financing. Companies may be able to restructure high-cost debt, address liquidity events and prevent equity dilution by utilizing IP financing facilities with attractive terms.
With survival in mind, today’s business owners, founders need to quickly adopt a culture of using intangible assets as viable financing collateral. As the world moves deeper into the fourth economic revolution, business success will largely hinge on a company’s ability to produce ground breaking innovation that caps rising competition. Companies must include a strategic financial partner who understands the IP financing landscape. Properly structured IP financing can fuel a company’s long-term strategic growth and guard its competitive advantage.
The team at Alpha Bridge have extensive experience in the field of technology and patent driven solutions. Our cutting-edge approach involves deep involvement right from identification of the opportunity to value creation of the right solution. We enable companies to use patents as a driver of innovation, rather than just having to protect that innovation.
If your business is full of ideas to create that disruptive change in the society, or if your business is looking to capitalise an existing disruptive idea, then contact us to help you bring that disruptive change through innovation!
Contact Us At enquiry@alpha-bridge.co.uk
