Event 26th March 2026 Understanding Intellectual Property Finance

The presentation by Paul Dunne (Nat West) and Tom Gigg (Inngot) and subsequent discussion focused on a pioneering partnership between NatWest and Inngot to provide intellectual property (IP)-backed loans, specifically designed to help innovative businesses bridge the "Valley of Death" where traditional debt is often unavailable.

Presentation Overview: Unlocking Hidden Value

The core premise is that as the economy shifts toward software, AI, and biotech, intangible assets have become the primary drivers of enterprise value, yet they are often overlooked as collateral.

• The Problem: Traditional lenders typically require physical assets or personal guarantees, which many high-growth, IP-rich firms lack.

• The Solution: A standardized process to identify, value, and take security over IP assets such as software, patents, trademarks, and registered designs.

• The Product: Loans starting at £250,000 with a maximum loan-to-value (LTV) of 50%. Notable successes include a £1 million loan to SixFive Networks and a £700,000 loan to Sci-Net.

• The Evaluation Framework: Inngot uses three primary lenses to determine collateral suitability:

  • Separability: Can the asset survive if the business ceases trading?

  • Saleability: Is there a secondary market for the asset?

  • Strength: How well-protected and attractive is the asset to buyers?

Key Issues Raised in the Discussion

The discussion highlighted several critical considerations for businesses and lenders regarding the practicalities of IP finance:

1. Debt Serviceability vs. Collateral Value A recurring theme was that while the IP provides the collateral, the loan is still a debt product. The bank must be confident in the company's ability to service the debt through current or future cash flows. The "Agreement in Principle" stage focuses heavily on the business's growth trajectory and financial forecasts.

2. The "Art" of Valuation and Annual Revaluation Unlike physical assets that depreciate (like vehicles), IP value often increases as a company scales and gains market share. A unique feature of this product is that the IP is revalued annually. In every case drawn so far, the financial "shot in the arm" from the loan has led to an increase in the IP's value at the one-year mark.

3. Software and Copyright as Viable Collateral There was significant interest in whether software—which is often protected by copyright rather than patents—could be used. The presenters confirmed that software platforms are highly suitable, as copyright applies by default and can be a strong, saleable asset if the underlying code is well-documented and defensible.

4. Handling Business Failure (The "Disposal" Plan) A major concern for any lender is what happens if the company dissolves. The process includes identifying a "disposal group" (top competitors or typical buyers) at the outset. If a liquidation occurs, the bank has a registered, fixed charge over the specific IP assets, allowing them to sell the IP to these identified parties.

5. The Impact of AI on IP Strength The discussion touched on the emerging risk of AI, noting that while it can accelerate product development, it might also make IP less defensible if competitors can easily replicate software features. This places a greater emphasis on the "due diligence" of the IP portfolio and the need for businesses to constantly reinvest in their IP to maintain a competitive edge.

6. Preparedness for Founders For early-stage founders, the presenters offered "top tips" for becoming loan-ready:

• Understand your differentiator: Is it what you do, or how you do it?

• Document everything: Keep "receipts" of R&D spend and maintain forensic records of development timelines and handbooks.

• Professional help: Engage with IP attorneys or specialists early to ensure the IP is properly structured before seeking commercial viability.

Conclusion: An opportunity for spreading the word and future collaboration

The session concluded with a strong commitment to local economic growth and collaborative action, particularly within the Swansea ecosystem, where Tom Gigg expressed a personal goal for a Swansea-based firm to become the first Welsh recipient of an IP-backed loan. Participants moved beyond theoretical discussion to practical application, proposing the creation of hypothetical case studies and a comprehensive summary document to educate a wider distribution list of businesses and innovators. There was significant enthusiasm for integrating these financial tools into the university's knowledge exchange and incubation programs, with organizers offering to act as ambassadors for the product. Ultimately, the meeting ended on a high note of partnership, with plans to explore student collaborations

The slides for this event are available here