IP-backed finance… the conditions are right

Good news for start-ups, scale-ups and SMEs, the World Intellectual Property Office has recently published a report concluding that the UK is well positioned to make IP-backed finance work.

Its reasoning is as follows:

“Firstly, it has a large population of innovative businesses with high-growth potential, an increasing number of which are investing in IP. Secondly, it has a well-established legal framework for IP offering a range of protection and enforcement options. Thirdly, its legal system enables security to be taken over movable, intangible assets.”

Fortunately, the UK Intellectual Property Office (“UKIPO”) is taking the lead on this with a working group to drive action in this area. The UKIPO often cites the fact that intangible assets are likely to make-up around 70-80% of a firms’ value. Indeed, it says that IP intensive industries account for around £300 billion a year in the UK.

The UKIPO has led on research in this area for some time. For example, its report in 2022 found that approximately 90% of all UK industries contained businesses that had at least one IP right (e.g. trade marks, copyright, designs or patents). This report also found that industries with an above average use in IP rights accounted for more than half of all goods exported.

IP therefore is clearly ubiquitous and, when properly leveraged, adds greatly to the output of any business. No surprise therefore that this could be a basis for securing finance from sources such as crowdfunding platforms, business angels and venture capital firms.

Of course, all of this will be subject to some form of due diligence in which a company’s IP portfolio is likely to be audited. Such audits look for gaps in protection, such as a copyright work still held by a third party (assignments are often overlooked), or a trade mark not yet registered in a key jurisdiction (consider your current customer base and the countries in which your goods are manufactured). In order to prepare for this, you would be well advised to commission your own professional audit in advance. Fortunately, our expert solicitors at Briffa are on hand for just such a task. We can analyse your current IP portfolio, advise on the gaps, provide a strategy to effectively fill those gaps and help you execute that strategy in the most cost-effective way possible, just email info@briffa.com to arrange a free consultation.