For innovative companies to have adequate access to capital, accounting and lending standards must be updated to accurately assess the value of intangible assets such as intellectual property and other forms of know-how.
Finding funding for a new business or idea is almost always challenging. With the recent near-collapse of the financial sys- tem, however, funding innovation is even more difficult. Credit to businesses has tightened dramatically. The market for ini- tial public offerings is moribund, and ven- ture capital has been reduced to a trickle. As a result, the “valley of death” between a promising idea and a mar- ketable product appears to be even more of an unbridge- able chasm. For many innovative companies, funding to move from a promising new concept to commercialization is simply not there.
One sign of hope is the emerging practice of providing funding to companies on the basis of their intellectual prop- erty (IP) and other intangible assets. Although IP, effective management, worker know-how, and business methods are widely recognized for their role in propelling the growth of the U.S. economy, the country is still largely failing to acknowledge the real value of these intangible assets and to provide innovative companies with the funding they need to capitalize on them.
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Author: KENAN PATRICK and JARBOE IAN ELLIS
