Bank of England head of financial stability, strategy and risk says research and policy initiatives around IP-backed finance could help drive UK growth

Photo by Annie Spratt on Unsplash

Further evidence for the growing commitment in government and amongst regulatory bodies to fully exploring IP-backed finance as a viable solution to the challenge facing IP-rich scaleups came last week in a speech by Nathanaël (Nat) Benjamin, the Bank of England’s Executive Director for Financial Stability Strategy and Risk and a member of the Financial Policy Committee (FPC).

This speech, Removing Frictions, focused on stimulating the UK’s economic growth and the steps the Bank of England and related bodies were taking to achieve that objective. It was made on Thursday 04/12/25 in Newcastle, at a meeting hosted by the North East Chamber of Commerce.

Nat Benjamin covered how high-growth firms face issues (“frictions”) in securing finance:

“First, they face growing challenges in accessing domestic finance as funding rounds get larger, especially from domestic sources. While the UK has the third-largest venture capital (VC) market in the world and a growing venture debt market, the level of venture investment per capital lags behind peers. Research by the British Business Bank (BBB) finds that UK VC investment is around 0.7% of GDP, around 10% less than in the US over 2022-24 on a relative basis.

These challenges are compounded by the fragmentation of the UK’s funding ecosystem. There are multiple agencies and schemes, creating a complex, inefficient landscape that SMEs and high-growth firms struggle to navigate.”

“…In addition, traditional bank lending can also be less well suited to high-growth firms because, although these firms are either growing rapidly or have the potential to grow rapidly, they have a limited trading history, they are not yet consistently profitable, and they have low levels of the type of collateral that banks would traditionally require as security against the loans…The assets that they often do have, for example intellectual property, are not commonly accepted as collateral due to valuation difficulties, the lack of standardised frameworks for assessing IP risk, and recovery constraints that banks face in case of default.”

While admitting that

“There isn’t a single solution to these challenges. But we highlight several things that could help the financial sector provide the breadth and depth of services that high-growth firms require… There is also space for additional research and policy work on barriers facing high-growth firms in accessing finance. This includes work to better understand impediments to lending backed by intellectual property (IP), such as a lack of information to value and assess an IP’s value as collateral that will be increasingly needed as the intangible knowledge economy becomes an even more important part of UK growth. An important government initiative in this space is a working group exploring how best to support lending to IP-rich sectors.”