Unlocking Your IP's Financing Potential

Posted on 01 Nov, 2021
By IPOS International

In knowledge-based markets, nothing stays still for very long. Keeping ahead of the competition requires a continuous process of innovation. If this costs more than you can fund from retained profits, then you’ll need to look for external sources of funding to support your plans.

This guide sets out to explain the funding landscape from two IP-related angles. The first concerns the routes you might take to fund the creation of your IP; the second looks at the routes you can take to fund more IP, once you have some already.

Chapter 1 sets the scene by considering why and how IP and funding often go hand-in-hand. It introduces the principle of risks and returns to explain how each main type of funding may suit different development stages. It explains in general terms how IP is a consideration in equity investment, debt finance and grant-awarding, and how you might combine them to raise the funding you need.

Chapter 2 starts from your IP. It looks at the characteristics of intangible assets that are likely to make them more or less well suited to use for raising finance, providing a ‘scorecard’ to help you determine where you might be on the IP attractiveness scale.

Chapter 3 focuses on the type of funding which is most commonly associated with IP-intensive companies: equity investment. After characterising the types of business for which selling shares makes the most sense, it examines why IP matters to investors, how their expectations may vary by development stage, and what ‘due diligence’ they may conduct on it, with a checklist to help you prepare.

In the past, it has generally been the case that lenders took little notice of IP and intangibles. However, now that growing companies typically have few of the tangible assets banks like to use as collateral, IP is starting to become a consideration. Chapter 4 sets out the main types of debt available, the types of IP most likely to be considered valuable and how security is taken over them, and the limitations that banking regulations impose on IP use.

Chapter 5 concludes the guide with a section on grant funding. It considers who can qualify, what strings may be attached, and how grant awards can help businesses secure other forms of finance. It also considers how to look after the new IP that a grant award is likely to help you create.