Can Your SME use Intellectual Property Assets for Financing?

In recent years, there is growing awareness that intellectual property (IP) assets can be monetized. There are various ways to do so. IP can be sold, licensed, used as collateral or security for debt finance, or it can provide an additional or alternative basis for seeking equity from friends, family, private investors (the so-called “business angels” who invest in unquoted small and medium-sized enterprises (SMEs) and often also provide experience and business skills), venture capitalists, specialized banks and some times even from regular banks.

In addition, in most countries, the Government provides encouragement and support to high-tech start-ups and other innovative SMEs through grants, guarantees, subsidies and/or soft loan schemes, which are provided via various public funding institutions and banks that directly or indirectly recognize the importance of intellectual property assets.

As an owner/manager of an SME, therefore, it is important for you to look after the intellectual property of your SME not only as a legal asset but also as a financial instrument.