Unlocking growth: UK's journey into IP-backed finance

The United Kingdom stands at the threshold of a significant shift in its financial landscape, as a report launched in London today sheds light on the emergence of Intellectual Property (IP)-backed finance as a viable option for businesses, particularly small and medium enterprises (SMEs). Produced by the World Intellectual Property Organisation (WIPO), the report indicates a growing trend towards IP-backed lending in the UK, signalling a potential boon for firms looking to scale and grow.

The report underscores the importance of IP-intensive industries, which contribute over a quarter of the UK's output annually, amounting to £300 billion. Moreover, it highlights that intangible assets, often protected by IP, can constitute a substantial portion, ranging from 70% to 80%, of a firm's overall value.

Notably, UK banks are increasingly embracing IP-backed lending, with institutions like NatWest and HSBC UK rolling out new loan products tailored to leverage IP assets. However, challenges persist, including limited awareness among financiers and industries, as well as uncertainties regarding IP valuation and market visibility.

In response to these findings, the UK Government announced the formation of a working group led by the UK Intellectual Property Office (IPO) to drive action in the realm of IP-backed finance. This initiative aims to enhance the profile of IP financing, improve market insight, and streamline processes related to recording charges against registered IP.

Viscount Camrose, Minister for AI and Intellectual Property, emphasised the government's commitment to supporting business growth through innovative financing solutions. He noted that accessing the right finance at the right time is critical for firms seeking expansion opportunities, and IP-backed finance presents a promising avenue for unlocking growth potential.

Echoing this sentiment, Daren Tang, Director General of WIPO, emphasised the transformative role of IP financing in driving enterprise growth. He emphasised the need for broader stakeholder engagement to mainstream IP finance and hailed the UK IPO's commitment to spearheading this initiative.

Industry leaders also expressed optimism regarding the prospects of IP-backed lending. Neil Bellamy of NatWest Group highlighted the potential of IP lending to fuel economic growth and innovation, while Roland Emmans of HSBC UK emphasised the significance of IP in the country's economy and welcomed the spotlight on IP financing opportunities.

Matt Dixon of the Chartered Institute of Patent Attorneys (CIPA) underscored the importance of IP-backed lending in bridging the funding gap for asset-light businesses, particularly high-growth SMEs rich in intangible assets.

The report launch marks a significant milestone in the UK's journey towards embracing IP-backed finance as a mainstream funding option. With concerted efforts from government, industry, and regulatory bodies, IP-backed lending could emerge as a powerful catalyst for unlocking the growth potential of innovative SMEs across various sectors of the economy.