How to Get the Most Out of IP Financing

Published on 13 Oct, 2016

IP Financing Analysis

Download this report:     How to Get the Most Out of IP Financing

The use of intellectual property as collateral to obtain finance is an increasingly common phenomenon.

Over the past three decades, the proportion of tangible assets in the market value of Standard & Poor’s 500 firms has declined from over 80% to under 20%.

This clearly signifies the rising contribution of intangible assets such as patents, brands, customer goodwill and employee goodwill.

With companies’ growing IP portfolios, financing against collateralization of IP assets is increasingly seen as a realistic alternative to traditional financing.

Many banks, non-bank lenders, government bodies and capital venture and financing arms of large corporate bodies provide IP-backed financing — some have been doing so for more than three decades.

However, herein lies the irony.

According to a survey conducted by the Federal Reserve System, over 98,000 business loan transactions (secured by collateral) were executed in 2015 by domestic and foreign commercial banks in the United States.

However, intangible assets — primarily patents — were used as security in just about 4% of them.

In this article, we analyze what has kept IP-based financing from taking off, and more importantly, what can be done to overcome it.


This article first appeared in IAM Yearbook: Building IP value in the 21st century 2017, a supplement to IAM, published by Globe Business Media Group - IP Division.

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