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The change of the industry in knowledge-based capital (KBC) has been rising significantly in the past decades. Empirical research has shown that investments in knowledge-based capital, i.e. intangible assets, have become key drivers of economic growth across Western economies.

DISCUSSION PAPER: PATENT/INTANGIBLE ASSET BANK (PB-IAB)

BASIS ASSUMPTIONS & OBJECTIVES :

  • Enlarge the concept of the “patent bank “ ( as described by Andreas in the basic document that you created ) towards IC so Entity IC could also have an option in the concept.
  • Create a common language between SME’s and financiers in order to set between both parties the right expectations.
  • Perfect guidance of the use of the money an SME gets (loan, equity, grant or otherwise ) from a financier is better than a good guarantee scheme.
  • A good guarantee scheme is useful to “ convince “ banks, VC’s and other financial institutions to supply SME’s with the demanded money. In many cases, the guarantee instrument becomes the only reason why a bank, VC or other financial institution will give a loan or equity. We want, in our concept of the PB-IA bank, make sure that the money provider understands the way the SME is going to use the money and understands how these financial injections will create more innovation and by definition more added value ( intangible assets ) and more revenue, based on these assets.
  • In our model, we will make sure that knowledge transfer to the SME’s will be realized.
  • In case of default, we will foresee an exit strategy so the loan/ equity givers will not lose their money.
  • All the members of the consortium need to make a profit based on the added value they provide in this model. The basis of collaboration will be a JV between Intracom, Entity IC and JRC.
  • The model we will develop must be functional for 1 SME as well as for a large number of SME ’s. In the case a large number of SME’s will be involved in using our model, we will have some spin-off advantages such as
    • a potential ‘ranking “ tool, based on the real intangibles assets and revenue streams that are originated by those assets. It could become a kind of S&P / Moody’s/ Fitch group of SME’s landscape if there are >50K companies involved.
  • Big data that are sellable to different users of intangible asset information of SME’s
  • It is our ( Intracom & Entity IC ) objective to develop a model that can be used for 1 SME as well as for the follow up of a large number of SME ’s.
  • It is also our ( Intracom & Entity IC ) objective to develop a model that can be used with only patents ( + IC related assets to that patent ) as collateral with a guarantee concept as basis , till an longitudinal IC/IP evaluation based on the 10 step approach ( Entity IC ) with financing and coaching based on a nearly NO-risk model . ( knowledge manager inside )
  • Once the model is made, there will be an annual evaluation of the functioning of the model and the model will also be open for new partners in the model, were others can stop their participation.
  • Any model we will develop cannot cannibalize our( Intracom & Entity IC ) existing market and market approach. The model needs to offer extra value for both companies and should not use too many resources in setting it up and running it. On the other hand, all the members of the consortium need to know their role ( for which they will be compensated ) in terms of “responsibility and deliverables “ and all of that to a high standard of professionalism.
SMS. Online selling, e-commerce, shipping concept
Photo: 88studio
  • We need to introduce the model in a modular step by step approach so we can grow into the model as we go forward which will give us the opportunity to add new elements to the model as we move forward. On the other hand, this modular approach should not be a blockage to leverage the potential earning we can generate with it.
  • The objective will be to develop an automated system ( the be developed by the 3rd party ) with which we can do a quick scan of the intangible assets of a company ( present versus future value and tacit versus explicit ) on a regular basis and identify their needs in the innovative process ( could be financing , protecting advise , patent registration , litigation advise , managing their IC etc ) .
  • The consortium will organize the continue measuring of the performance of the companies and the needed consulting and the guarantees are needed.
  • All the upfront investments by the partners in the consortium (Intracom, Entity IC, ICT company, setting up a fund by JRC, legal advice, etc ) will be covered by an initial investment ( equity or grant or both ) into the joint venture (Intracom, Entity IC & JRC )

OVERALL CONCEPT

Excellence

Objectives

The change of the industry in knowledge-based capital (KBC) has been rising significantly in the past decades. Empirical research has shown that investments in knowledge-based capital, i.e. intangible assets, have become key drivers of economic growth across Western economies. IPR and intangibles make up 90% of corporate networth2, solutions for using such assets as collateral are not existing in Europe even though there is a huge need, especially for SME operating Key Enabling Technologies (KET).

The crucial actors in this process are the small and medium-sized enterprises (SMEs), especially start-ups, who develop knowledge assets and exploit their increasing returns to scale. Nonetheless, young SMEs may face a number of difficulties in raising the capital necessary to grow, essentially because they are subject to high risks of failure and they have a very small or non-existing amount on tangible assets but have on the other side a lot of innovation capacity.


Accounting Series – Article No: 35 (Published March 22nd, 2019)

Accounting Theory – Advanced Part 25

The picture on the top: Elnur

Categories: Accounting, Law, Magazine


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Peter Welch
Peter Welch

GlobalCfo.LLC is an expert at developing entrepreneurs and building 3-5 year business plans and cash flow projections as a prerequisite for accessing financing sources. GlobalCfo.LLC targets accounting standards compliance and theory, sound infrastructure /process mapping and COSO 2013-17/solid internal controls, ERM, and last but not least documentation /Policy and Procedures and other manuals. Additionally, interim CFO services (or Rent-a-CFO by the hour/day) are offered locally or remotely as well as training at all levels and all functions, not just accounting; e.g., management and leadership skills. Pre/Post-M&A is also offered.

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