IP Valuation helps Manage Firms
The dire need for a cure for Corona illustrates the necessity
to come to grips with the valuation of intellectual property. There is neither
time nor budget to waste. Ideally, a straight forward solution should be found
in the next couple of months, if not even weeks.
Yet, and here lies the dilemma, markets for technology don’t
work like that. Technology development is riddled with uncertainty. Risks stem
from the technology itself, which may not be viable after all, as well as macroeconomic
and financial risks; to name a few.
Because creative learning is central to innovation processes
it is also difficult to predict how much money will be needed to create viable long-term
technology solutions. Penicillin was discovered by mere coincidence and when 3M
aimed at finding a glue that would stick really well, it discovered a glue that
did just the opposite. Then again, there are those examples where millions are
spent and in spite of that the technology is ultimately abandoned.
Intellectual Property which is adequately valued can in such
contexts help. While the valuation of intellectual property can do little to
prevent such risks, it can help enhance transparency. This in turn allows to
better manage a firm and make enhanced investment decisions.
Intellectual property protects various different business
segments. Patents protect the technology itself, copyright helps protect code
and software, trade secrets offer the protection of strategic business
information and trademarks help leverage the brand of a firm. These various
forms of IP are crucial for a firm to succeed. In particular, it is the
congruence of different forms of IP that help a business to succeed. The
valuation of IP helps shed light on the many tactics a company has at its
disposal to leverage synergies. At the same time, it can help manage risk. This
helps attract investments and enhance ROI (return on investment).
IP Valuation works in Practice
I have had many opportunities to show that such approaches
work in the real world. Just recently I undertook the valuation of a tech start
up specialized in urban mining. The firm focuses on extracting valuable
materials from electronic trash. In doing so, it addresses a massive
environmental challenge, while at the same time opening up previously unknown
business opportunities.
The IP valuation I undertook helped the firm reorient its
strategy. The IP business strategy set the baseline for a massive increase in
revenues. At the same time, it helped the firm minimize its operational costs.
Quite simply, this was possible because of the immaterial
nature of IP. Trading in intangible assets is a good deal more cost effective
than in tangible property rights. Such approaches may also work for firms
specializing in a cure for Corona. An IP valuation can help a firm save costs,
increase returns and enhance its technology strategy. At the same time, an IP
valuation helps investors make educated investment decisions. These advantages
are immensely valuable in the age of Corona, where we need to assure every
Pound is spent wisely. The path to finding a cure to the virus is invariably
interlinked with an adequate analysis of the economic impact of intellectual
property.
1 comment:
I agree that this area deserves much greater attention than it generally gets but securing IP Valuations , especially for start ups short of cash can often be just another time/cash burden (like the cost of securing IP protection in the first place) such that by the time its value is truly realised , the opportunity to file for protection has been lost.
The only bright spot here is the availability of R&D tax credits-a lifeline for many UK tech start ups (and many ongoing successful IP related businesses). So why not extend that tax break to cover not just the development costs themselves but also the costs of seeking and securing IP protection AND professional valuation advice-thereby helping to underpin the very IP that is the product of that R&D.
Post a Comment