Faculty Scholarship

Jon GaronFollow

Document Type

Book Chapter

Publication Date

January 2018

Abstract

This article is part of a series of book excerpts from The Entrepreneur’s Intellectual Property & Business Handbook, which provides the business, strategy, and legal reference guide for start-ups and small businesses. One of the more challenging aspects of developing a company based on intellectual property assets is the challenge in valuing those assets for the purpose of both lenders and investors. As a general matter, the intellectual property assets created by a company are not reflected as having value on the company’s books. As the WIPO primer on intellectual property for small business explains, “[t]he practice of extending loans secured solely by [intellectual property] assets is not very common; in fact, it is practiced more by venture capitalists than by banks.”[1] Despite these accounting barriers, investors and lenders increasingly have come to value the potential of these assets.WIPO has an extensive library of resources on valuation that can help the entrepreneur understand the complex financial models used by investors and lenders.[2] By understanding the basics of intellectual property valuation, the entrepreneur can communicate the true value of these assets to those willing to finance the start-up.[1] Small & Medium-sized Enter. Div., Intellectual Property for Business 16 World Intell. Prop. Org., http://www.wipo.int/export/sites/www/sme/en/ip_business/pdf/ip_business.pdf.[2]List of Documents on IP Valuation, World Intellectual Prop. Org., http://www.wipo.int/sme/en/documents/valuationdocs/index.htm (last visited July 12, 2018).

Publication Title

The Entrepreneur’s Intellectual Property & Business Handbook

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