UK leads the way in IP-secured lending for high-growth SMEs

In what is claimed to be a banking world-first in terms of its availability and affordability, NatWest has launched lending for high-growth SMEs secured against their intellectual property assets. The bank has partnered with valuation specialists, Inngot, who will provide a valuation of a business’s IP that can then be used as collateral for loans starting from as relatively little as £250,000.

The Natwest product was the centrepiece of an IP Finance event hosted by the UK Intellectual Property Office, in partnership with the World Intellectual Property Office, in London today attended by IP Minister Lord Camrose, CIPA President Matt Dixon, Vice-President Bobby Mukherjee and Chief Executive Lee Davies. The event was held to promote WIPO’s UK IP finance report and Natwest’s IP-backed lending to IP-rich SME scale-ups.

Matt was quoted in the UK IPO’s news article about the event.

High-growth SMEs generally own few tangible assets, but are often rich in IP and other intangible assets. Because of their lack of
fixed assets, fast-growing scale-ups can find it difficult to secure growth funding. This has led to a large funding gap in the UK estimated at £15 billion p.a.

High-growth scale-ups are defined as businesses that grow at more than 20% p.a. and, according to the latest report from the ScaleUp Institute, they are having a huge impact on the UK economy in relation to their size. In 2023 there were 28,410 scale-ups which generated a total turnover of £1.3 trillion (58% of the turnover of all UK SMEs) and employed 2.6 million people, despite making up just 0.5% of the SME population.

NatWest has become the first UK high street bank to step in and offer a loan product that can match the ambitions of these fast-growing, asset-light businesses by directly harnessing their IP as collateral. If an SME has patents, or other IP, that Inngot can confirm are suitable as security, NatWest is prepared to lend them up to 50% of the estimated IP value, over up to four years.

Martin Brassell, Co-Founder and CEO of Inngot and a member of CIPA’s IP Commercialisation Committee, said: “This is a very significant development. It’s a turning point in terms of being able to realise value from IP.

“This is not the first time IP value has been taken into consideration by a mainstream UK commercial bank: HSBC UK has been using our IP valuations to provide comfort on Growth Lending deals for a while. Their core appetite is to lend £5m to £15m to help businesses with strong venture capital backing to bridge to profitability.

“However, NatWest’s product marks the first time we have seen a UK bank willing to attribute collateral value directly to IP assets, including patents, at repayment levels that are highly affordable. The £250,000 starting point makes IP-based funding accessible to growth companies at real scale.

“This product represents an attractive alternative to raising money via equity, and getting diluted. It also rewards UK SMEs for investing in IP, and I believe it will help more companies to realise the importance and value of a strong IP strategy. I can’t think of a better way to encourage SMEs to take IP more seriously than to show them that they can borrow against its value.”

Neil Bellamy, Head of Telecoms, Media and Technology (TMT) for the NatWest Group, has developed this initiative with Martin. Both men attended a world IP finance conference held by WIPO in Geneva in November 2023, where they first shared news of the product.

Neil said: “I can confidently say that we are the first bank globally to do this at scale. We did already lend to intangible balance sheets. My balance sheet is £14billion and most of that is to companies with intangible assets. But these are all to much larger firms at a later stage of their development. To have a high-growth IP loan that starts at £250,000 is a real game-changer.”

Date published: 19 March 2024

A full version of the interviews with Martin Brassell and Neil Bellamy featured in this article were published in the March 2024 edition of the CIPA Journal.

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