IntellectualProperty

KisStartup – compiled and presented

After understanding what IP-backed financing is, a common question many startups ask is:
“It sounds promising, but has anyone actually done it? And how?”

The answer is yes – and more often than many realize. The following cases show that intellectual property (IP) is not just legal paperwork. In many situations, it has become a real financial tool that helps companies survive, scale, or restructure. More importantly, each case offers concrete lessons for startups.

Magic Leap: Using patents as collateral

Magic Leap, an augmented reality (AR) startup that raised billions of dollars, used nearly 2,000 patents as collateral in a financing deal with JPMorgan Chase in 2019.
This did not mean selling the patents. Magic Leap continued to use the technology to develop products. However, the size and clarity of its IP portfolio gave the bank confidence that, in a worst-case scenario, these assets could be licensed or transferred to recover value.

Lesson for startups:
You do not need 2,000 patents. What matters is managing IP as a structured portfolio, not as isolated documents. A well-organized IP portfolio is far more financeable.

Kodak: IP as a financial lifeline

When the film camera market collapsed, Kodak faced severe financial distress and near-bankruptcy. What saved the company was not factories or equipment, but a portfolio of over 1,000 digital imaging patents.
By selling and licensing these patents, Kodak raised approximately USD 525 million, enabling financial restructuring and survival.

Lesson for startups:
IP is not only for growth; it is also a risk buffer. In times of crisis, IP may become the last strategic asset that enables recovery.

Masai: An IP-backed loan saves an SME

Masai, a Singapore-based footwear company, owned patented designs that improved posture and health. When counterfeit products flooded the market, revenues dropped sharply, pushing the company toward bankruptcy.
In 2016, Masai became one of the first companies to access an IP-backed loan under Singapore’s national IP financing scheme. Using its core patent as collateral, the company secured a seven-figure loan, enabling restructuring and renewed growth.

Lesson for startups:
IP-backed financing is not only for big tech. SMEs and early-stage startups with genuinely protected and differentiated IP can access it—if the ecosystem allows.

NatWest: Banks designing IP-based products for startups

In the UK, NatWest Group offers lending products for high-growth businesses where IP is considered part of the collateral base. The bank works with independent IP valuation firms to assess patents, software, and trademarks.
Companies may lack physical assets but must prove that their IP is closely linked to the business model and future cash flows.

Lesson for startups:
When banks understand IP, startups are no longer forced to rely on real estate. In return, startups must demonstrate strong IP governance and transparency.

South Korea & China: When governments unlock IP-backed finance

South Korea has built a national IP valuation system, allowing companies to borrow up to 60–70% of assessed IP value—even with limited credit history. Tens of thousands of technology SMEs have gained access to capital as a result.
In China, patent- and trademark-backed lending has grown rapidly, reaching hundreds of billions of USD. This growth is driven by clear policies, bank incentives, and a national strategy that treats IP as a strategic asset.

Lesson for startups:
IP-backed financing is not only about individual firms. It requires an ecosystem: policy, valuation, insurance, and enforcement. Startups that standardize and manage IP early benefit most when such ecosystems mature.

What should startups take away?

Across all cases, one message is clear: no one secures financing simply by “having IP.”
Successful companies share common traits:

• IP tightly connected to real business activities,
• clear ownership, and
• a compelling commercialization story that convinces lenders of future value.

For startups, these examples are not a promise of immediate IP-backed loans. They are a reminder that IP can become a powerful financing lever—if prepared early and managed correctly.

© Copyright KisStartup. Any reproduction or reuse must clearly cite KisStartup as the source.

References:

Avon River Ventures
Case Studies: Successful IP-Backed Financing Deals
A compilation of notable IP-backed financing transactions, including SMEs and technology startups.
https://avonriverventures.com/case-studies-successful-ip-backed-financin

Reality.News / Public Filings
Magic Leap Patents Signed Over to JPMorgan Chase as Collateral (2019)
Information on Magic Leap using its patent portfolio as collateral in a financing agreement with JPMorgan Chase.
https://www.reality.news/news/magic-leap-patents-signed-over-jpmorgan-ch

BlueIron IP
IP-Backed Lending in Asia
An analysis of IP-backed lending models in Asia, including South Korea, China, and Singapore.
https://blueironip.com/ip-backed-lending-in-asia/

Singapore IP Financing Scheme – Case Masai
Masai as one of the earliest cases to access IP-backed loans under Singapore’s national IP financing program.
Compiled from:
https://avonriverventures.com/case-studies-successful-ip-backed-financin

NatWest Group (UK)
Intellectual Property Finance & High-Growth Lending
Information on lending products for high-growth companies, where intellectual property is recognized as part of the collateral.
https://www.cliftonpf.co.uk/blog/10072024142230-intellectual-property-fi

CNIPA & China IP Today
Statistics on the rapid growth of patent- and trademark-backed loans in China.
https://www.chinaiptoday.com/post.html?id=2243

https://english.cnipa.gov.cn/art/2024/1/24/art_3090_190001.html

WIPO – Country Perspectives on IP Finance
A series of country-level reports (China, Malaysia, etc.) on policies and models for intellectual property finance.
https://www.wipo.int/publications/en/series/index.jsp?id=241

 

Compiled and presented by KisStartup

For many technology startups, the most valuable assets are not factories or machinery, but intangible resources: technology, software, algorithms, inventions, data, and brands. Yet for a long time, financial systems have been accustomed to lending based primarily on tangible assets. This gap has left many startups in a difficult position: rich in value, but short on capital for growth.

IP-backed financing emerges as a solution to this challenge.

What Is IP-Backed Financing, in Simple Terms?

IP-backed financing refers to funding mechanisms in which startups use their intellectual property (IP) as the basis for securing loans, instead of—or in addition to—real estate or physical assets. IP assets may include patents, software, algorithms, trademarks, copyrights, or trade secrets, as long as they have the potential to generate economic value in the future.

The key point is this: banks or funds do not lend simply because a company “has IP,” but because they believe that the IP can generate cash flows, or at least be exploited or transferred if the business encounters financial distress. For this reason, IP-backed financing is particularly suited to technology startups and innovative SMEs—companies with limited tangible assets but strong IP portfolios.

Where Is This Market Globally?

Globally, IP-backed financing is growing relatively quickly, but it remains a niche segment rather than a mainstream credit channel. Most transactions are concentrated in countries with clear policies, robust IP valuation systems, and strong intellectual property protection frameworks, such as the United States, the United Kingdom, the EU, China, South Korea, and Singapore.

In these markets, IP-backed financing has not developed organically. Governments play a significant role by providing loan guarantees, subsidizing IP valuation costs, or establishing national IP evaluation systems. This reduces risk for banks and expands financing options for startups beyond equity.

Compared to asset-based lending using tangible collateral, the overall scale of IP-backed financing is still relatively small. This is not because IP lacks value, but because IP valuation is complex, enforcement and liquidation are difficult in default scenarios, and not all financial institutions have the capability to manage such risks.

How Can Startups Access IP-Backed Financing?

In practice, IP-backed financing takes multiple forms. Some startups secure loans by pledging patent portfolios or proprietary software. Others leverage IP as a foundation to access venture debt, combining debt financing with equity fundraising. More mature companies may monetize IP through licensing or outright transfer, generating cash flows that strengthen their balance sheets.

Across all models, one principle holds: IP must be connected to real business activity. Successful cases globally—from medtech and software to creative industries—demonstrate that IP becomes a financial asset only when embedded in a clear commercial narrative: who pays, for what purpose, and whether those cash flows are sustainable.

Why Do Many Startups with IP Still Fail to Secure Loans?

This is a common and often sobering question.

The first barrier is weak IP governance. Many startups have strong technology but unclear ownership, incomplete contracts with employees or partners, or reliance on third-party assets without robust agreements. For banks and funds, these issues represent significant risk.

The second barrier is the absence of proven cash flows. If IP remains at the idea, prototype, or pilot stage, without evidence of commercialization, meaningful valuation for lending purposes is nearly impossible.

The third barrier is market infrastructure. In many countries, including Vietnam, secondary markets for IP are underdeveloped. In the event of default, liquidating IP is far more complex than selling real estate. As a result, lenders often demand higher interest rates, additional guarantees, or simply decline financing.

What Does IP-Backed Financing Mean for Vietnamese Startups?

In the short term, IP-backed financing is unlikely to become a widespread option in Vietnam. However, in the medium to long term, this trend is almost inevitable, as corporate value increasingly resides in intangible rather than tangible assets.

For Vietnamese startups, the priority should not be to “borrow against IP immediately,” but to prepare for that possibility. This means treating IP as a real business asset: managing it clearly, linking it to revenue models, and articulating a compelling commercial story. Doing so not only positions startups for future IP-backed financing, but also makes them more attractive to investors, partners, and the broader market.

IP-backed financing is not a miracle solution, nor a shortcut. It is the result of serious IP management aligned with real business execution.

For technology startups, moving early in this direction may not lead to immediate loans, but it does place them one step ahead when capital markets begin to recognize intellectual property as a fully legitimate asset class.

© Copyright KisStartup. Any reproduction, quotation, or reuse must clearly credit KisStartup.

References

WIPO (World Intellectual Property Organization)
Moving IP Finance from the Margins to the Mainstream (2025).
A foundational WIPO report on the role of intellectual property in financial systems, analyzing why IP must be “financialized” as intangible assets grow in economic importance. https://www.wipo.int/edocs/pubdocs/en/wipo-pub-rn2025-7-en-moving-ip-fin...
Avon River Ventures
Understanding IP-Backed Financing: An Introduction.
An overview of IP-backed financing concepts, common lending structures, and why this model suits technology startups. https://avonriverventures.com/understanding-ip-backed-financing-an-intro...

Chambers & Partners
IP-backed financing: Leveraging intellectual property for income generation and as collateral.
A legal and financial analysis of using IP as collateral for growth-stage companies. https://chambers.com/articles/ip-backed-financing-leveraging-intellectua...

Inngot
IP Finance: Using intellectual property as loan collateral.
A practitioner’s perspective from a leading European IP valuation firm, outlining conditions under which banks accept IP as collateral. https://inngot.com/news-views/ip-finance-using-intellectual-property-as-...

Market Growth Reports
Intellectual Property Financing Market Report.
Market data on the size, growth rate, and key segments of the global IP financing market. https://www.marketgrowthreports.com/market-reports/intellectual-property...

Healthcare Digital
Intellectual property-backed lending is rapidly emerging as a pivotal financing mechanism for health.
An in-depth analysis of IP-backed financing transactions in the healthtech and medtech sectors. https://www.healthcare.digital/single-post/intellectual-property-backed-...

Blind Spot 1: Having IP but failing to link it to revenue
Ask yourself:

• What is our core IP (technology, software, data, processes, brand...)?
• Where is this IP generating direct or indirect revenue?
• If this IP were removed, would our current revenue be impacted?

Warning Signs:

• IP only appears in the “Legal” slide of your pitch deck.
• No one on the team can answer: How does this IP help us make money?

Quick Fix:

Write one sentence: “IP [X] helps us generate revenue by [Y] from customer [Z].”

If you can’t write this → you have a serious blind spot.

Blind Spot 2: IP exists but fails to create competitive barriers (Moats)
Ask yourself:

• If a competitor sees our product today, how long would it take them to copy it? (1 week / 1 month / 6 months / 2 years?)
• Which part of the product is the hardest to replicate?

Warning Signs:

• Competitors copy quickly, and the startup is “powerless” to stop them.
• The only advantage is speed, not control or ownership.

Quick Fix:

Circle 1–2 elements that are the hardest to copy → that is the IP you need to protect and exploit, not everything else.

Blind Spot 3: Messy or ambiguous IP ownership
Ask yourself:

• Who created the IP? Founders, employees, freelancers, or partners?
• Have all rights been officially transferred via signed contracts?
• Are we using third-party code, images, or data without clear permissions?

Warning Signs:

• IP was written by a freelancer without a clear contract.
• The Founder thinks it belongs to "the company," but the paperwork is still in their personal name.

Quick Fix:

Create a simple table: IP – Creator – Owner – Proof of Ownership.

Even one ambiguous IP is enough to make investors walk away.

Blind Spot 4: IP is not aligned with the target market
Ask yourself:

• In which market is the startup currently making (or planning to make) money?
• Is the IP protected in that specific market?
• Do we have a plan for territorial IP expansion?

Warning Signs:

• IP is registered "just to fill the file" but doesn't match the actual business territory.
• No one on the team knows where the IP is currently protected.

Quick Fix:

Apply the 80/20 Rule: Protect your IP in the regions that will generate 80% of your future revenue, not everywhere at once.

Blind Spot 5: IP is unusable for fundraising & partnerships
Ask yourself:

• If an investor asks: “What is the proof of your IP’s value?” → what can you provide?
• Can this IP be licensed, integrated, or shared under controlled conditions?

Warning Signs:

• You only have certificates, but no contracts, Letters of Intent (LOI), or pipelines.
• The IP depends entirely on one specific individual in the team.

Quick Fix:

Prepare an IP Value Proof Slide: [Which IP] → [Helped which deal] → [Created what value].

Self-Diagnosis Results

• Below 3/5 points: IP is a strategic weakness.
• 3–4/5 points: You have a foundation, but IP is not yet a lever for growth.
• 5/5 points: Your IP is ready for deep exploitation (licensing, fundraising, partnerships).

The Message

IP is not dangerous because you haven't registered it — IP is dangerous because you don't know how it serves your business model.

This mini-checklist is the first step for startups to view IP as a business asset, not just a legal procedure.

© Copyright by KisStartup. All forms of copying, quoting, or reusing must clearly credit the source: KisStartup.