Can IP help you get financing

You have built something people want. Perhaps you own a patent, a growing catalogue, or software customers already pay to use. Those assets can help fund the next stage. Before you pitch them, know which kind of financing you are asking for and what you would be handing over in return.

There are several different financing ideas

WIPO describes three ways IP supports financing: you pledge the rights as collateral, you transfer the rights to the income they generate, or you present the IP as evidence of your company's value when a lender or investor decides. 1 2 An equity investor buys a stake in the company and examines its IP in due diligence; a lender lends money and expects it back. 2 In a sale-and-license-back, you sell the IP for cash up front and take a license back so you can keep using it; you stay responsible for maintaining and protecting it. 2 4 Name the route you want. A loan secured on your rights, a sale of royalty income, and an investment in your company create very different obligations.

Picture a catalogue with steady license income: a financier can look at that income stream. Now picture a business with no licensing revenue yet, but with technology at the heart of its next product: an investor weighs that technology as one part of the whole business. Neither picture means money is available. Each one tells you how to describe what you are offering.

Collateral has consequences

When you give a lender a security interest, the lender gets the right to sell those assets if you default. 4 You usually keep ownership during the loan, but the lender can set conditions on how you use the IP, including whether you can license or transfer it. 1 WIPO's loan guide lists the usual consent clauses: without the lender's permission you may not sell or assign the IP, offer it as security for another loan, or grant exclusive or sole licenses. 4 Expect to keep your registrations in force and renewed, to tell the lender when someone challenges your rights, and, in many loan agreements, to give the lender security over new IP you create with its money. 4

If licensing is how you earn, as with software sold as a service, get your customer licenses carved out of those covenants before you sign. 4 If your company depends on one software product, read every security clause as if the lender already held it: who could sell those rights after a default, and what happens to your existing customers and licenses? Have a lawyer who handles secured lending in your country review the security agreement and covenants before you sign; they decide what you can do with your IP for the life of the loan.

The lender needs an answer about recovery

A right can be valuable to you and still be hard for anyone else to sell. WIPO's 2025 discussion paper names five obstacles to IP finance: IP is hard to value, many lenders and investors do not understand it, regulators do not encourage it as collateral, transaction costs are high, and IP is hard to sell off. 2 Financiers lend against what they expect to recover, and with no liquid secondary market for IP, the amount recovered after a default is typically substantially lower than the assessed value. 2 Banks usually deduct 20 to 30 percent from the resale value of property; for IP they deduct more, so the loan-to-value ratio can be 50 percent or less. 4

Consider software that only works with the founder's continued support, or a database that cannot readily be transferred. An optimistic income forecast does not tell a lender what those rights would fetch on their own. So when a report puts a large value on "the IP", ask about its assumptions and who would actually buy, and do not expect a loan of the same size.

Evidence can make the discussion more concrete

Prepare what a lender's due diligence checks: title (who owns each right), status (does it exist and is it in force), scope (what it covers), spread (where it is valid), maturity (what traction it has) and disputes. 4 The company that borrows must own the IP. If a right is registered in a founder's name, transfer it to the company first; core IP you license in from someone else is very unlikely to count. 4 Show that IP offered as collateral will stay valid for the whole repayment period and remain marketable in a foreclosure or bankruptcy. 3 A patent close to expiry and a well-established catalogue therefore get very different treatment. WIPO's loan guide includes templates for a schedule of registered rights, a checklist of copyright assets and a due-diligence pack you can fill in before the first meeting. 4

Recording the lender's interest is a legal step of its own. Lenders often file notice of their security interest with the local IP office or a movable collateral registry, depending on national law, and repeat it in each country where your IP is held. 1 A private portfolio entry, timestamp or valuation certificate does none of this. An offer described as "international" still has to go through each country's system.

A useful conversation can end with another route

Work through these steps in order:

1. Decide how much you need and what for. Lenders prefer uses that build or exploit your IP, such as research, marketing, entering new markets or hiring; some bar using the money to repay existing debt or to pay shareholders. 4
2. Ask the lender what it accepts as security and what evidence it needs. Ask before you pay for a valuation: lenders often have a preferred method or valuer. 4
3. Get the full cost in writing: interest, one-time arrangement fees (which can be higher for IP-backed loans because specialists are involved), early repayment fees, the valuation and due-diligence costs usually passed on to you, and code escrow if the lender requires it for software. 4 Ask whether a government subsidy or loan guarantee applies in your country; several countries offer them. 4
4. Read the covenants and consent clauses against your business plan before you sign. 4

If someone promises guaranteed funding simply because you own IP, ask in writing who provides the money, on what terms, and what they take as security.

You may find that licensing to a commercial partner, growing revenue first, or a different kind of funding fits better. That is a useful result. The goal is to fund a workable plan on terms you understand. IP can be part of that conversation without becoming a promise that creativity, by itself, turns into credit.