Intellectual Property Valuation and Business Strategy

ip valuation

The dire need for a cure for Corona illustrates the necessity to come to grips with the valuation of intellectual property. There is neither time nor budget to waste. Ideally, a straight forward solution should be found in the next couple of months, if not even weeks.

Yet, and here lies the dilemma, markets for technology don’t work like that. Technology development is riddled with uncertainty. Risks stem from the technology itself, which may not be viable after all, as well as macroeconomic and financial risks; to name a few.

Because creative learning is central to innovation processes it is also difficult to predict how much money will be needed to create viable long-term technology solutions. Penicillin was discovered by mere coincidence and when 3M aimed at finding a glue that would stick really well, it discovered a glue that did just the opposite. Then again, there are those examples where millions are spent and in spite of that the technology is ultimately abandoned.

Intellectual Property which is adequately valued can in such contexts help. While the valuation of intellectual property can do little to prevent such risks, it can help enhance transparency. This in turn allows to better manage a firm and make enhanced investment decisions.  

Intellectual property protects various different business segments. Patents protect the technology itself, copyright helps protect code and software, trade secrets offer the protection of strategic business information and trademarks help leverage the brand of a firm. These various forms of IP are crucial for a firm to succeed. In particular, it is the congruence of different forms of IP that help a business to succeed. The valuation of IP helps shed light on the many tactics a company has at its disposal to leverage synergies. At the same time, it can help manage risk. This helps attract investments and enhance ROI (return on investment).

IP Valuation works in Practice

I have had many opportunities to show that such approaches work in the real world. Just recently I undertook the valuation of a tech start up specialized in urban mining. The firm focuses on extracting valuable materials from electronic trash. In doing so, it addresses a massive environmental challenge, while at the same time opening up previously unknown business opportunities.

The IP valuation I undertook helped the firm reorient its strategy. The IP business strategy set the baseline for a massive increase in revenues. At the same time, it helped the firm minimize its operational costs.

Quite simply, this was possible because of the immaterial nature of IP. Trading in intangible assets is a good deal more cost effective than in tangible property rights. Such approaches may also work for firms specializing in a cure for Corona. An IP valuation can help a firm save costs, increase returns and enhance its technology strategy. At the same time, an IP valuation helps investors make educated investment decisions. These advantages are immensely valuable in the age of Corona, where we need to assure every Pound is spent wisely. The path to finding a cure to the virus is invariably interlinked with an adequate analysis of the economic impact of intellectual property.