StartupFinance

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.

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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-...