How much is my IP worth?
How do I get bank loans against my company's IP?
How are loans secured against my intellectual property?
How much is my intellectual property worth in litigation?
These are questions we are regularly asked by our clients, especially those in the technology, software and pharmaceutical industries. Those questions arise as companies grow and expand. They sometimes arise when investors provide capital or when a company wants to dispose of certain key intangible assets. They also arise when companies try to resolve disputes over who owns what and in “how much is it worth” arguments.
In short, intellectual property valuations are often difficult to determine, and unlike tangible assets, there are few benchmarks that can be used. However, we have helped many clients in both disputes and investments, and the key to doing so is understanding the underlying values of a company’s intellectual property.
Traditionally, IP-secured loans for businesses have been difficult to obtain and limited to companies that had a reliable and repeatable revenue stream. Prior to May 2024, the only UK-based bank that considered IP as an asset was Silicon Valley Bank, which sadly went bankrupt in March 2023. However, the lack of conventional finance in the UK is holding back one of our biggest opportunities. Thankfully, times are changing.
While lending against royalty streams has worked well for established companies with conventional products, this meant that technology companies and technology-led start-ups found it difficult, if not impossible, to obtain bank loans. The reason for this was that, with a few exceptions, for many companies intellectual property was not visible on the balance sheet. Many banks simply did not understand intellectual property. In simple terms, lenders understood bricks but not clicks. After all, tangible assets can often be recovered and their values realised in a fire sale; even less so with intellectual property.
Sollomon valuation software offered by Inngot offers help in obtaining loan funds for early-stage technology companies and those with significant intellectual property assets. The tool has been developed and improved over the last 10 years and is now used by both NatWest and HSBC as the backbone for lending against intellectual property assets.
The Sollomon tool takes into account all of a company’s intellectual property and analyzes aspects such as market size, overseas opportunities, and many other large data sets to assess the existing and potential market value of the intellectual property. It also takes a company’s cash flow forecast and calculates the direction and speed of travel for that company.
At Virtuoso Legal we spend time with clients ensuring they have all their bases covered for maximum valuation before sending data to the software. We review key intellectual property documents and global intellectual property portfolios and make strategic, budgeting and commercial suggestions that will improve the future of the business and its intellectual property. We then input all the data and help businesses formulate an IP strategy and position that can be used for specialist bank lenders and business planning for the future.
This is a really exciting new era for bank lending and NatWest and HSBC have been early adopters of Sollomon and IP-rich businesses as their next business opportunities. There's no doubt about it, technology-rich companies are often investable targets, so if you'd like to find out more about how we can help, get in touch:
