Risk and Governance in IP Lending

In this episode of the Inngot podcast, Ryan Buckle interviews James Andrews, head of financial and insurance markets at Inngot, discussing the complexities of risk in lending, particularly concerning intangible assets and intellectual property (IP). They explore how banks assess risk, the challenges posed by intangible assets, and the common misunderstandings surrounding IP and risk. The conversation also delves into how banks identify bankable IP, the importance of IP in company valuation, and the evolving attitudes towards IP financing in the market. Andrews emphasises the need for companies to recognise the value of their IP and the potential for IP financing to unlock growth opportunities without compromising ownership.

Takeaways

• Risk in lending is fundamentally about uncertainty.

• Intangible assets are often viewed with caution by traditional lenders.

• Accounting practices lag behind the realities of intangible asset valuation.

• IP can be the most significant asset for innovative companies.

• Banks need to actively identify and assess bankable IP.

• Investors often misunderstand the implications of IP financing.

• IP risk should be a priority on company risk registers.

• IP financing can reduce personal liability for company directors.

• There are no hidden catches in IP financing; it is straightforward.

• The landscape of IP financing is changing, becoming more mainstream and accessible.

Chapters

00:00 Understanding Risk in Lending

02:03 The Challenges of Intangible Assets

04:59 Misunderstandings About IP and Risk

07:21 Identifying Bankable IP

10:10 The Role of IP in Financial Statements

12:04 Cost and Market Landscape of IP Valuation

14:35 Investor Perspectives on IP as Security

18:58 Reassuring the Board: The Value of IP Financing

21:03 Understanding IP as a Business Asset

22:15 Addressing IP Risks in Funding

23:58 Personal Guarantees and Their Implications

26:36 The Catch in IP Finance

28:21 Market Changes: The Evolution of IP Financing

31:29 The Credibility of IP Financing Today

33:29 The Future of IP Financing for Businesses