Krutarth Shah is CEO of Avon River Ventures Intellectual property (IP), such as patents, trademarks and copyrights, is becoming increasingly important and lucrative in business. A report by Semico Research forecasts that worldwide IP revenues will approach $10.3 billion by 2025. China and the United States saw an overall filing count of 3.4 Million Patent applications in 2022 as per the World Intellectual Property Indicator Report published in 2023. As a subset of the intangible class of assets, IP occupies a complex niche within the asset appraisal space when compared to tangible assets. Here are some considerations that companies looking to navigate the valuation, benefits and risks of IP-backed financing can keep in mind.
IP-backed financing can benefit startups and lower- or middle-market companies in numerous ways. Startups are constantly seeking funding opportunities. Today, when startup valuations have shrunk, they need to get their IP valued to showcase a third-party valuation. This helps startups gain investor confidence and eventually determine the correct valuation for their company. Considering the Indian Venture Capital Market, startups have seen a decline in global VC capital deployment, with an overall investment tally dropping from $25.7 billion in 2022 to $9.6 billion in 2023. Startups worldwide have been constantly searching for capital to finance their growth.
