Companies require additional capital for various purposes, such as beginning or extending operations, sustaining or increasing research and development investment or for further acquisitions. Start-ups require short or medium-term loans to complement different financing rounds. Cash flow, perhaps the key consideration in debt finance, is often very closely connected to a company’s IP and intangibles. Despite this and good evidence to show that high-growth, IP-rich businesses are more resilient and perform better than others over time, IP and intangibles are rarely considered in mainstream lending practice.
This is unsurprising. Balance sheets do not represent the value of these assets, and current regulations actively work against consideration of IP and intangibles as an asset class. The result is a real and important disconnect between banking regulation and practice and a country’s growth ambitions. Recent banking initiatives targeting growth businesses are finding that traditional fixed assets simply no longer exist. In the asset-based lending market, too many examples have emerged of transactions where control over IP and intangibles is recognised as being important. IP and intangibles are, in effect, unbankable.
To discuss this issue and ways to correct this practice, CII is organizing the 5th International Conference with the theme Technology, Financing and Intellectual Property Rights on 3-4 December 2019 at Hotel Le-Meridien, New Delhi. On this occasion, the fifth edition of CII Industrial IP Awards would also be given.