IP finance: a new day dawns

I've been very encouraged by the fintech and IP industries' reaction to the breaking news of NatWest Group 's new IP-based loan for high growth companies, supported by the Inngot platform.

If you've not seen the original story yet (... where have you been?), you can find the press release on the NatWest website.

A broad welcome

There's no doubt that the reaction to this announcement has been very positive, as we hoped it would be (representing as it does a major endorsement of the fact that IP really can have value lenders should take into consideration).

Naturally, a few questions have popped up, some of which might be worth briefly touching on here.

Clearly, this High Growth IP Loan doesn't re-write the basic rules of borrowing. It is still vital for companies to be able to meet affordability criteria. Also, the IP taken as collateral must be actively contributing to cash flows for it to represent usable security (it must have been commercialised to some degree).

However, the approach can work with all forms of intellectual property - patents, trade marks, copyright and designs can all be taken into consideration.

For the moment, businesses in Scotland will have to be a little patient, while the good work currently going on at Registers of Scotland to implement recent legal changes on security interest filing is completed.

Also, I don't dispute that the 'proof of the pudding' will be in the actual lending... watch this space for more news on that front.

Don't under-estimate the significance...

Of all the coverage I've seen so far, I think one of the articles which best summarises the significance of what is happening here is this one from Fintech Industry Examiner. Many thanks to Jessica Brown for the analysis.

As it observes, by going beyond the traditional forms of security that have been the staple diet of pretty much all banks, we are starting to re-align the true interests of the lender with those of the borrower.

An IP-based approach also enables an element of non-dilutive financing to be introduced at an earlier stage of growth than would otherwise be possible. As a result, it is particularly well-suited to the target audience of scale-up businesses. These scale-ups make a disproportionately large contribution to economic performance, as well documented by the ScaleUp Institute .

The article observes that this move should encourage other lenders to look afresh at the asset class. So it's only fair to acknowledge that some are already doing so. In fact, it's more than a year since 汇丰 UK launched its Growth Lending initiative, which Inngot also supports with our platform; this recently announced a welcome ￡100m boost to its lending fund - as further evidence that the appetite is out there.

... or the effort!

This feels like a good time to acknowledge some of the contributors that have finally enabled us to get to this point. Apologies for anyone I inadvertently miss out.

I should start with Neil Bellamy and all his colleagues at NatWest Group (not forgetting the original 'trailblazers' at Lombard, like Keith Nowland ) who have provided the support and drive needed to find a way to make this happen.

I am, of course, most proud of the whole Inngot team - in analysis, design, business and technology development, customer operations, training, marketing, moderation and monitoring - that believed in the vision and stuck with it. We have built the world's one and only truly scalable platform for identifying, valuing and assessing IP and intangibles for finance, as a result of your hard work.

As well as blood, sweat and (occasional) tears, all this takes money. So I would like to say a special thank-you to our board and my co-investors (those who have discovered us recently, and those who have been on this journey for a while). I would also like to give a particular shout-out to Innovate UK for its support for our mission.

More generally, I would like to acknowledge the boost to IP-based financing from the renewed focus it is now receiving from government and NGOs. Here I should again mention the team at World Intellectual Property Organization – WIPO who have initiated its IP financing dialogue, and of course here at home, at the Intellectual Property Office UK .

This, as they say, is just the start...