Published March 21, 2024

Greater access to IP-backed finance could help firms, especially SMEs, leverage their IP to scale and grow

  • A new report launched in London today finds the UK meets the right conditions to make IP-backed lending to SMEs viable 
  • The report – produced by the World Intellectual Property Organization (WIPO) – shows IP-backed lending is becoming more available to UK businesses 
  • UK Government announces a new working group led by the UK Intellectual Property Office (IPO) to drive action on IP-backed finance 
  • IP-intensive industries account for over a quarter of UK output – £300 billion a year. Intangible assets may make up around 70-80% of a firm’s value.

A UN agency report launched in London today by the UK’s Minister for AI and IP, Viscount Camrose, and WIPO Director General Daren Tang, finds UK banks are beginning to engage with IP-backed lending. 

The report notes new IP-backed loan products, such as those recently launched by NatWest and HSBC UK, signal that new IP-backed financing options are emerging in the UK to help businesses scale and grow. This follows earlier research which found that firms with registered IP may make better lending candidates. 

A joint collaboration between WIPO and the IPO, today’s launch event marks another step in WIPO’s work program to help improve policy and industry insight into the viability and practices of IP finance globally. The UK report contributes to a growing body of evidence on the opportunities and challenges in moving IP finance into the mainstream. 

Overall, IP-intensive industries account for more than a quarter of UK output – around £300 billion a year. Intangible assets – often protected by IP – may make up around 70-80% of a typical firm’s value.  

The report recognizes that the UK meets the ‘essential preconditions’ for IP-backed finance to work at scale: a strong IP regime, a pool of innovative firms, and a vibrant financial sector. While these are positive developments, the report notes there is much further to go to move IP financing from the margins to the mainstream. 

The report highlights several challenges to firms using IP to raise growth funding, including low levels of awareness among financiers and industry, a lack of secondary markets for IP assets, confidence in IP valuation, and limited visibility of IP in business reporting. 

At today’s event, the UK’s Minister for AI and IP, Viscount Camrose, also announced that the IPO will act to raise the profile of IP financing and identify avenues to improve investment into IP-intensive firms by:  

  • Establishing an advisory working group to bring together experts from the financial sector, IP profession, and academia to help shape policy in this globally developing area of business finance. 
  • Bringing together, in an annual report, a set of regular and consistent metrics to improve market insight into using IP to access equity and debt finance. 
  • Looking into avenues to improve the process of recording charges against registered IP before the IPO. 

These next steps will support the IPO’s ongoing policy work on IP finance. This activity will complement the IPO’s wider interventions to help businesses better identify, manage, and protect their IP. 

Viscount Camrose, Minister for AI and Intellectual Property said: “This report is further evidence of the UK’s commitment to supporting businesses to grow and scale however we can, tapping into their unrivaled IP innovations to help them scale and grow. Accessing the right finance at the right time is critical for firms looking to expand, and companies can now leverage their individual intellectual properties to help unlock new opportunities and drive growth.

“The government’s new working group will also help to drive this effort forward, ensuring the UK establishes itself as the main destination for businesses who are looking for new ways to drive growth.”

Daren Tang, Director General of WIPO said: “Intellectual property is not just a legal right or a business catalyst, but also a financial asset. IP financing will unlock new paths for enterprises to grow, but still feels unfamiliar to many key stakeholders. It is therefore time for us to move this conversation beyond IP specialists and experts to get those in finance, investment, accountancy, and valuation involved in moving this piece forward together. IP offices are no longer just IP registries but important builders of a country’s innovation ecosystem and will play a central role as catalysts for IP finance. 

“This is why I strongly welcome the UKIPO’s firm commitment to work with WIPO and key stakeholders within the UK and internationally to transform IP financing from exotic to mainstream.”

Neil Bellamy, Head of Tech Media & Telecom, NatWest Group said: “Unlocking value from intellectual property (IP) and intangible assets can be a key enabler for the UK economy. Helping firms to scale, create high-value jobs, and boost UK productivity. IP lending offers an opportunity to enable innovative firms on their growth journey. I welcome the government’s commitment to improve insight into this emerging funding option and help shift IP lending into the mainstream.”

Roland Emmans, Head of UK Tech Sector and Growth Lending, HSBC UK said: “HSBC UK works with some of the country’s most innovative and disruptive firms and has looked at their Intellectual Property (IP) as a key part of our lending analysis for some years now. We have a long history of creating and developing world-leading ideas into valuable IP in the UK, and its importance to the economy has been growing steadily. We’re delighted to see the spotlight shone on the IP financing opportunity from the WIPO report as it will deliver further impetus to accelerate this growth.” 

Matt Dixon, President of the Chartered Institute of Patent Attorneys (CIPA) said:  “High-growth businesses may often own few tangible assets but can be rich in IP and intangible assets. These businesses can find it difficult to use their traditional assets as collateral to secure growth funding, leading to a potentially sizeable funding gap for fast-growing, but asset-light, businesses. IP-backed lending could play an important role in addressing this gap. 

“It is widely recognized that intellectual property represents a significant part of the value of businesses across all sectors of the economy, and these developments are a great step toward helping unlock the potential of innovative SMEs in key industries. We are delighted to see that UK banks are beginning to engage in IP-backed lending, and welcome the plans announced by the IPO today to help drive action in this emerging area.”

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