Is IP the key to accessing funding for your business?

Blog IP Funding

A few weeks ago NatWest the high street bank, launched a new SME lending product with support of Inngot.

Aimed at high growth businesses and supported by Inngot Limited, the IP valuation specialists, the NatWest High Growth IP Finance product is designed to support SMEs. What makes it different to traditional lending is that Intellectual Property (IP) assets may be taken into account alongside other assets, such as property and equipment, when the bank is evaluating security for the loan. NatWest will use tools provided by Inngot to identify and evaluate assets that could be used as security, opening up funding to companies who cannot secure a loan through the more traditional leverage of tangible assets.

This may provide SME’s that don’t have a strong physical asset base a way to access funding that would ordinarily be out of reach.

Who qualifies?

Whilst this sounds like a great idea, it left me wondering how many SMEs would actually qualify for the scheme. In my experience, SME owners don’t pay as much attention to their intangible assets as they do their physical assets, which is a real shame because often these assets can unlock significant value for them. I like to spend time with my clients to understand all of their assets including those you can’t see, talking about the role of IP and how it can increase the value of their business once it is identified, understood, and protected.

To have a chance of accessing funds through this scheme, business owners will need to understand what IP they have in their business. It is really important that proper advice is taken from IP professionals and so I’ve asked my go to IP contacts Rosalyn Newsome, chartered trade mark attorney and partner, and Oliver Pooley, European and UK patent associate at Barker Brettell LLP to discuss more about how SMEs can benefit from their IP.

What is Intellectual Property (IP), and why is it important for SMEs?

Intellectual property is the umbrella term for intangible assets. A patent protects an innovation, a trade mark protects the brand, a registered design protects the aesthetics of the product and copyright protects artistic works. Each type of IP right is a different beast and can bring a different set of benefits. Understanding and protecting IP assets is the foundation for SME growth.

How can Intellectual Property benefit a business, especially in the SME sector?

In order to exploit what you own, firstly you have to recognise it and secondly understand what it can do for your business. It is well documented that at the seed stage, start-ups with IP protection are more likely to secure funding whether from private equity or government backed schemes. For example, the government operate a scheme designed to encourage innovation in the UK, the Patent Box, this allows companies to pay a reduced rate of corporation tax (10%) on profits made from patented inventions it owns or exclusively licenses. And at the other end of the journey, a business with IP protection is twice as likely to result in a successful exit for investors and be seen as more attractive for acquisition.

What are some common misconceptions about Intellectual Property?

One prevalent misconception is that IP is only relevant for large corporations whereas in reality, SMEs often possess unique innovations that can be protected. Investors and potential business partners often consider a company’s IP portfolio when making investment decisions. Being IP aware definitely helps distinguish you from your competitors which is so important when competition for funding is fierce. Another misconception is neglecting the importance of early IP planning. Waiting until a product gains traction in the market can leave a business vulnerable to infringement or loss of market share, and more importantly a lost opportunity to protect and commercialise.

How do I secure my Intellectual Property?

The first step is to conduct an IP audit. This involves identifying and categorising all intellectual assets within the business. Once you know what you have, you can take appropriate steps to protect it, whether through patents, trademarks, designs, copyright, or trade secrets. Consulting with an IP professional during this process is invaluable, as they can provide tailored advice based on the specific strategic needs of the business and identify IP which may otherwise have been overlooked.

Can you share some examples of a small business that benefited from understanding and securing its Intellectual Property?

Take the example of a tech start-up that developed a cutting-edge software solution. By proactively securing patents for their innovative algorithms and processes, they not only protected their market position but also attracted investors who recognised the unique value of their IP. This eventually led to successful partnerships and substantial business growth.

There are several case studies on our website which illustrate this point exactly, read here and here. It is so rewarding to see companies reap the benefits of their investment in IP through enhanced growth, sourcing additional funding or licensing opportunities.

How can a lack of attention to Intellectual Property impact SMEs in the long run?

Neglecting IP can have severe consequences. SMEs may find themselves entangled in costly legal disputes, lose market share to competitors, or face challenges in attracting investors due to the perceived risk. Furthermore, without adequate protection, there’s a risk of unauthorised brand use or counterfeit products, both of which erode the very foundation of the business.

What advice would you give to business advisors and accountants working with SMEs regarding Intellectual Property?

It is crucial to educate SMEs about the strategic importance of IP. Encourage them to integrate IP considerations into their overall business strategy. Collaborate with IP specialists to conduct regular audits, identify valuable assets, and formulate an IP strategy which support the business goals. A proactive approach to IP can be a game-changer for SMEs, fostering innovation and securing their position in the market.

Intellectual Property is not just a legal form filling exercise; it’s a strategic business asset.

SMEs that understand, value, and protect their IP stand to gain a competitive edge and maybe unlock long term value in their business. Collaborating with IP specialists can be a transformative step towards unlocking the full potential of a business’s intellectual assets.

If you would like to understand more about how you can unlock the value of Intangible Assets in your business please contact Richard Hallsworth, or if you are interested in protecting your IP Rosalyn Newsome on 0121 456 0347.

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