The European Union Intellectual Property Office (EUIPO) has published a report on IP-backed finance, "IP-backed finance in Europe," which reveals that the underutilization of intellectual property (IP) as a basis for securing funding is hindering the scaling of innovative companies.
The report estimates that the credit gap among EU SMEs (small and medium-sized enterprises) can reach up to 3650 billion euros annually, with 700 to 1500 billion euros of that amount attributed to IP-intensive companies.
However, among IP-intensive companies, only 13% had attempted to raise funds using IP, and it was found that most companies had never conducted a professional valuation.
With the right financial infrastructure in place, it is estimated that IP-backed financing could generate €300 billion to €1200 billion annually, potentially impacting GDP by up to €7500 billion over a 10-year period.
However, valuing IP assets is difficult for financial institutions, and challenges in the secondary market, legal frameworks, and accounting systems have resulted in IP not being considered in lending decisions.
The report identifies five priorities to address these challenges: increasing IP visibility, providing reliable valuations, facilitating financing through risk-sharing mechanisms, building a robust data infrastructure, and strengthening collaboration among stakeholders.
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