Today’s businesses, particularly high growth ones, are likely to be driven by their intellectual property and intangible assets, which support their sales, profits, market share – and company value.

So, what are the first steps a company should consider if they want to explore using the value of their IP and intangibles to raise funding – either from lenders, equity investors or even grants?

Bear in mind security may be required. Product fees may apply. Finance is only available for business purposes.

Research shows there is a strong, positive relationship between IP and intangible assets. In one 2021 European study, IP-intensive firms had 20% more revenue per employee across firms of all sizes - and 68% more across SMEs.

True business value is increasingly unrelated to tangible items on the balance sheet. However, while companies are likely to maintain registers of these physical assets, comparatively few keep an equivalent inventory of their non-physical ones.

Without a clear sense of what you own and where you use it, it’s difficult to put effective steps in place to manage intangibles for maximum benefit.

Then, you can turn your attention to managing them. As with other types of business asset, you want to ensure:

• They are kept safe (so they won’t be stolen)
• They are properly maintained (so they can continue to deliver business benefit)
• They are being utilised to their full potential.

The assets that are most important to protect are the ones that safeguard your differentiators – the things that separate you from your competition.

For innovative companies, this may be your technology, your brand, your product features, your content, or just the way you do business.

Technology, branding and feature-related innovations can be protected using IP registration. These give you rights to stop others copying what you do. The most common forms of registered IP are patents, trade marks or designs.

You should already know if your company owns any of these.

• If you have some of these IP rights, you will need to manage and renew your applications and deal promptly with any infringement. Are you clear on who is responsible? Are they continuously looking for ways to build your portfolio?
• If you don’t have any of these, perhaps you should be asking; is there anything we are doing that could or should be protected in this way?

However, it’s also true that you can be IP-rich without owning any of these registered rights.

The most common form of unregistered IP is copyright. Creators get copyright in the things they create automatically – in the UK, there is no official register (though some other countries do have them).

Copyright protects many things you create while running your business. This includes:

• Software you develop
• The design of unique databases you create
• The content, images and ‘look’ of your website
• Your marketing literature, such as brochures and presentations
• The processes you have documented

You’ll probably have most, if not all, of these. Sometimes, copyright materials will be directly revenue-generative in their own right - for publishers, music companies, film and TV producers, for example.

One legal wrinkle is that if you paid someone else to create these resources for you, then the copyright could be theirs, not yours.

It is always wise to make sure that contracts with designers, photographers, ad agencies and copywriters, for example, assign copyright to you.

Your employment contracts, too, should clearly identify who owns ideas your employees create.

One consequence of the patenting process is that it involves telling the world how your unique innovation works, in return for the right to stop others using it without your permission, usually for a maximum of 20 years. Some organisations conclude that they would rather keep certain inventions secret instead.

Trade secrets can last indefinitely, and most countries have laws that govern them. However, to make them enforceable, you must have suitable procedures, contractual terms, and physical and electronic security measures to keep them secret.

Of course, you first need to know what they are; which takes us back to the IP inventory.

One test of whether secrecy could be a viable strategy is to apply the ‘reverse engineering’ test.

• Is your ‘secret sauce’ discoverable by your rivals and customers (could they dismantle what you do and find a way to recreate it?)
• If the answer is yes, patenting (where available) may be a better option

Putting together an inventory of your IP and intangible assets is useful for protection purposes. You can also use an IP inventory to help you develop your future IP strategy.

This can help you identify fruitful areas for future focus across the company, informing resource allocation across research & development, and sales and marketing. You may find opportunities to license your IP to non-competing companies, or into countries where you don’t plan to operate.

You can also get your IP valued to quantify the value hidden in your business, so you can use it in discussions with investors, lenders, and grant-funding bodies.

The value of what you have already created may help you get the finance you need to scale-up once you’ve proved demand for what you’ve created, or to get your next big idea from concept to production.

You’ve invested time, resources, and cash into creating your IP: now make it work for you.

Remember, your IP could be at risk if you do not keep up repayments on any debt secured on it.

For more on this topic visit Inngot - Adding value to your intellectual property.

Find out more about how the bank is supporting growing businesses.