Inngot

Using Intellectual Property to secure finance

Wherever a business uses specialist knowledge to serve its customers, its activities will have intellectual property (IP) at their core. This IP might lie in “formal” rights like patents, designs or trademarks; increasingly, in a service-driven economy, it is likely to involve proprietary processes, trade secrets and copyright material.

But IP poses companies with a common problem, wherever it may lie. While a business’s bundle of IP assets often underpins all its income streams, its worth is seldom expressed on a balance sheet. Since the underlying IP is hardly ever identified or valued, it cannot be exploited in the same way as tangible assets like property, plant and machinery – assets whose importance is reducing in an increasingly knowledge-based age.

Understating a business’s value in this way inevitably curtails its ability to borrow and to fund growth, a problem that is widely recognised in industry and Government circles. For example, at its February 2007 seminar on SMEs and their intangible assets, the ACCA summarised the position as follows: “Impetus must be given to developing an accepted valuation methodology and to stimulating intangible asset markets… It is imperative that a methodology is developed that values intangible assets so as to promote innovation within firms and the economy as a whole1” In February 2008, the DCMS paper Creative Britain concluded that: “Since most of the value of the creative sector derives from intangible assets, creative businesses must be able to value them accurately and have confidence that they will be vigorously defended under the law2.”

The way forward

There is no legal impediment to deriving greater shareholder value from IP. As its name suggests, IP is essentially a type of property, which means it can be licensed, bought and sold (or, technically, assigned) in much the same way as any tangible asset. However, to enable this potential value to be realised, two key preconditions need to be met.

Firstly, the IP’s scope and nature need to be clearly understood. This requires there to be an accepted means of describing and “commodifying” it – in other words, to transform the IP into a business asset with a separate identity, capable of being transferred to other parties. Secondly, the IP needs to have a financial value attributed to it.

Inngot’s system has been designed to overcome these two barriers. It provides new processes to explain what a company’s IP is, where its value lies, and how much it might be worth. In doing so Inngot also enables companies to make their IP known to a wide range of prospective customers, partners and investors.

With the help of Inngot’s registration and valuation regime, IP can be sold to a finance house, which then leases or licences the exclusive usage rights back to the originating business, in return for a monthly payment stream.

Inngot registration

Inngot’s systems exploit the potential of existing copyright law to create a secure environment where businesses can register and publish their IP. A unique new classification system is used to describe both the business and its IP, making it easy for potential customers, collaborators, acquirers and financiers to search for it. This is the opposite of existing copyright registration schemes, which effectively “lock away” published material.

As well as registering the IP, Inngot records the existence of any finance associated with it, creating a “notice mechanism” needed for a market in IP to prosper.

Inngot valuation

While IP valuation is conducted regularly, it is usually a “one-off” exercise in the context of a business sale or licensing agreement. Comparatives are rarely available and seldom published.

Inngot’s valuation mechanism has been created with a standardised transaction form in mind – an “arm’s length” sale to a finance house. In this context, the importance of the valuation is that the amount involved must be realistic; the asset must be worth at least the amount being lent (having factored in an appropriate contingency); and the lessee must have the ability to repay on the agreed terms.

Benefits

For companies, using IP as security provides a means to maximise the value of existing core assets without having to sell shares. All of the exclusive rights of usage remain with the originator, who can continue to develop its IP just as it would previously have done, but with the benefit of significantly more capital.

Asset finance always involves a fixed stream of payments over a given period of time, likely to compare favourably with variable bank charges. At the end of the term, a lease can revert to a “peppercorn” rental, while a licence can provide for full ownership to be returned at the end of the term. In the meantime, the fact that the legal ownership of the IP rests with a major financial institution significantly reduces the risks of deliberate infringement by a competitor.

Entering into a lease agreement does not “fix” the value of the IP, any more than the size of a mortgage determines the value of a property. If the business does well, the value of the IP will increase, opening up opportunities to realise further funding streams. This also suits the lender, as it prevents them from becoming technically “over-collateralised”.

The way forward

There are a growing number of commercial finance precedents where IP has been used to provide security for lending, and the mechanisms involved are familiar and well understood. As the marketplace develops, many of the techniques already developed in a competitive leasing market will start to be introduced, such as extended primary periods, payment holidays, peppercorns for secondary periods, and even (potentially) “balloons”. There are already signs that finance houses and brokers will develop specialisms in one or more sectors or IP types, as they have done for many years with tangible assets.

Inngot registration and valuation address the structural issues which have constrained the use of IP as security for finance to date – chiefly the lack of clear description, valuation and notice mechanisms. With these points addressed, IP-based financing becomes a very attractive option both for innovative companies and for finance companies.

Visit www.inngot.com today to find out more..

————————————————————————–

Advertisements
Categories: All, Inngot, IP General, Lending, Value | Tags: , , , , , , , , , , | 3 Comments

A case study on Concrete Canvas

A case study on Concrete Canvas

Supporting company valuations and licensing agreements

The Sollomon valuation system helps proprietors and licensees to understand and agree the value of intellectual property and intangibles for licensing purposes and equity distribution.

Concrete Canvas Ltd manufactures a ground-breaking material which allows concrete to be used in a completely new and far more efficient way. The patented technology was originally developed for the company’s award-winning Concrete Canvas Shelters, a “building in a bag” that requires only water and air for construction.

Concrete Canvas products are sold to large construction firms, utility and infrastructure providers such as Network Rail, the Highways Agency and the National Grid, local authorities and military organisations all over the world, with exports accounting for 80% of sales. Orders are, as CEO Peter Brewin is happy to report, “off the scale!” and the company’s current focus is on expanding its production capacity.

Concrete Canvas first used the Sollomon valuation tool following an introduction by the Welsh Government in 2010. It conducted a new valuation in 2011, as supporting evidence for an updated company valuation when the company was putting a new share incentive scheme in place.

Peter Brewin sees the valuation as being useful in many different scenarios. He has used it when agreeing a licensing deal with the company’s US partners, and adds, “I also found it helpful to be able to send a report round to investors in Concrete Canvas, so that they can see the value of the product they have helped us to create.”

Peter concludes, “Inngot are a friendly company who offer excellent customer service and provide an efficient yet robust way of valuing intangible assets.”

Visit www.inngot.com today to find out more..

————————————————————————–

Categories: All, Inngot | Tags: , , , , , | 4 Comments

Eco-Innovators and Intellectual Property

A new report, authored by Inngot for the ‘EcoMind’ cross-border initiative co-funded by the EU, has just been published. It investigates the IP challenges and solutions of most relevance to sustainable innovation.

EcoMind is a programme to support sustainable business growth and the development and market introduction of new, environmentally friendly products and services. One of the issues identified during the programme’s activities was the importance of obtaining sound commercial advice on intellectual property matters, particularly when bringing new products to market.

In order to produce actionable, evidence-based conclusions and guidance, Inngot conducted an intensive research exercise aimed at establishing the IP strategies being adopted by eco-innovators and the challenges and opportunities these present. This involved a combination of one-to-one interviews, secondary research and primary survey data (conducted online amongst the EcoMind membership, with support from the Environmental Sustainability Knowledge Transfer Network).

The report, Intellectual Property and Eco-innovation for Small and Medium Businesses, identifies key challenges faced by the sector, addressing in particular patenting, copyright and the alternative approaches often used to protect IP by preserving secrecy. It also highlights five aspects for eco-innovators to consider when formulating their IP strategy.

EcoMind has a strong focus on practical support. Accordingly, the final two pages of the report provide a list of 10 key questions, derived from the topics highlighted by Inngot’s research, and a “flowchart” to assist entrepreneurs in deciding which IP protection strategy is likely to be most appropriate for them.

EcoMind is led by BSK CIC and co-funded by the European Union under the Interreg IVA 2 Seas Cross-Border Programme 2008-2011.

Visit www.inngot.com today to find out more..

————————————————————————–

Categories: All, Inngot | Tags: , , , , , | Leave a comment

New Intellectual Property resource centre for innovators – IP Central

Inngot is working with the Technology Strategy Board and the Intellectual Property Office to provide IP Central, a community network providing resources on all aspects of IP, hosted on the TSB’s _connect platform.

The aim of IP Central (which can be found at connect.innovateuk.org/web/ipcentral) is to provide convenient access to the practical Intellectual Property information and advice needed by innovators, with a special focus on those seeking to partner and collaborate. This is a requirement for the TSB’s challenge-led funding programmes, but often appears complex and challenging to those approaching it for the first time.

The _connect system now has nearly 40,000 registered individuals, and provides the online platform for all Knowledge Transfer Networks. Inngot has already provided IP support to a number of KTNs (including managing the Beacon Project on IP and Open Source for the Creative Industries KTN): it will be ensuring that IP Central has a sector-agnostic approach, welcoming contributions and questions from all creative and technological fields.

The IP Central community network is grateful for the support of the Intellectual Property Office, who have kindly provided a range of useful documentation. This ranges from basic guides to patents and trade marks to the latest Lambert Agreement templates to help organisations formulate successful licensing agreements.

Membership of IP Central is free. The community network can be found by clicking the link above, or searching “ip central” on the connect platform.

Visit www.inngot.com today to find out more..

————————————————————————–

 

Categories: All, Inngot | Tags: , , , | Leave a comment

Inngots profiling system explained – Intellectual Property

A video on intellectual property based around inngots recently new and improved Profiling system which helps identify and capture organisations innovations.

It can sometimes be hard to separate an organisations intellectual property from the rest of the company. Inngot’s profiling system helps separate your intangibles from your organisation; a crucial part to utilising and making the most of your IP.

Identify, explain and promote your intellectual property and intangible assets. Our web tools will help you capture and identify not only intellectual property like copyright, patents, designs and trade marks but also value producing intangibles like trade secrets, special processes, specialist technical know-how and brand reputation — over 40 different types in total. Up to 75% of a company’s value can be hidden within its intangible assets. Make the most of yours by using Inngot’s profiling tool today.

Check out our new video and let us know what you think. Subscribe to our blog to keep up to date with future posts.

Visit www.inngot.com today to find out more..

————————————————————————–

 

Categories: Inngot, IP General, Protecting, Videos | Tags: , , , , , , , , , , | Leave a comment

Blog at WordPress.com.