Investments in Brands and IP is benefiting all involved stakeholders but also provides significant impact to the macro-economy and the society and is therefore a contributor to the UN Sustainable Development Goals (SDG).

Investing in a Brand is not just a simple marketing effort, it is rather a 360 degree effort of the entire organisation and analysing the community, partners, market, financials, quality/service and innovation, products and legal protection (as outlined in the ISO 20671 framework). It requires therefore also a “healthy” operation to achieve its goals and not only capital but also know-how is required to be successful.

Most of the SME and Midcap companies, which are often family-owned, have spent their cash reserve to stay in business during the recent financial crisis. To receive bank loans for such investments, without sufficient collateral, remains a challenge, especially if the investments are not solely fixed asset driven. Often the necessary brand and operational development know-how is not sufficiently available in SME and Midcap companies.

Specialized alternative financing sources can provide capital and know-how to support companies on their journey to growth and success. These Funds don’t have just the financial know how but also experts in operations, brand developments and a deep understanding of markets and consumers.

Overcoming the barriers to lending against IP assets is attractive at a national, European and global level.

Equity investors typically invest into companies, but not into IP assets as such. The equity finance community considers the importance of IP when financing companies, however, the actual value of IP assets per se is rarely considered important. IP is usually evaluated but not formally valued in the regular banking, venture capital or private equity sectors. The general consensus amongst those interviewed is that IP is too risky to be used as collateral for traditional loans. However, it must be noted that cases of intangible asset-based lending (IABL) have occurred in certain circumstances. Combined asset-based lending has been achieved whereby a bank provides a loan to a pension fund against tangible assets and the pension fund then provides a sale and lease-back arrangement against intangible assets. IABL from pension funds (on a sale and lease back arrangement) rather than banks, provides a route for SMEs to obtain loans that is gaining increasing attention.

One reason given for this uptake in IABL between a company and pension funds is the growing number of SMEs who have difficulties in securing bank loans.

It is usually unclear whether IP will generate benefits in the future. As a consequence, an important part of internally generated IP is not recognised in the balance sheet of an enterprise, meaning that potential investors are not receiving some relevant information about the company.

The filing of a “management report” together with the annual report, giving detailed information about IP value, seems to be a useful vehicle to improve publicly available information on intangibles.