Patent Office: "IP Finance Approaching 10 Trillion Won Era... Annual Growth of 26.5%"

Company A, a manufacturer of secondary batteries and automotive equipment, recently utilized intellectual property (IP) financing to raise funds for technology development aimed at business expansion. By evaluating the value of seven patents related to secondary batteries, the company secured a loan of 10 billion KRW to obtain operating capital. Based on this secured operating capital, Company A achieved double the sales revenue and operating profit compared to the previous year, and was honored with the 100 Million Dollar Export Tower award at the 'Trade Day' ceremony due to increased export volume.

IP financing allows companies like Company A to secure funds through collateral loans, investments, or guarantees based on the future value of intellectual property such as patents they hold. It is an effective financing method for early-stage startups that have technological capabilities but lack financial resources, and the market size is gradually expanding.

2019~2023 Intellectual Property Finance Scale. Provided by the Korean Intellectual Property Office

On the 25th, the Korean Intellectual Property Office (KIPO) announced that the outstanding balance of IP financing exceeded 9.61 trillion KRW last year. The scale of IP financing grew from 6.009 trillion KRW in 2021 to 7.7835 trillion KRW in 2022, and then to 9.61 trillion KRW last year, recording an average annual growth rate of 26.5%. Considering the growth trend over the past three years, it is anticipated that the scale of IP financing could surpass 10 trillion KRW this year.

Last year alone, the newly supplied amount reached 3.2406 trillion KRW. By type of IP financing, the supply amounts were 911.9 billion KRW for collateral loans, 1.3365 trillion KRW for investments, and 992.2 billion KRW for guarantees.

IP collateral loans refer to loans executed by banks to companies using the value assessment of the intellectual property they hold as collateral. The supply amount of IP collateral loans last year slightly decreased compared to the previous year (915.6 billion KRW), which is attributed to reduced incentives for new collateral loans amid a high interest rate environment.

However, the proportion of collateral loans to non-prime companies (with credit ratings of BB+ or below) increased by 2.09 percentage points to 84.16% last year, compared to 82.07% in 2022. This indicates that IP collateral loans are becoming an important source of funding for companies with excellent technological capabilities but lower credit ratings.

IP investment involves investment institutions investing equity in companies holding superior intellectual property or investing in patent monetization projects. In 2022, the investment scale exceeded 1 trillion KRW for the first time. Last year, the investment scale through intellectual property grew by 3.1% compared to the previous year. This growth is attributed to the government establishing a foundation for IP investment funds through contributions to the Korea Fund of Funds and expanding investee companies in cooperation with private investment institutions such as venture capital firms.

The Korea Fund of Funds is an investment fund in which the government contributes capital to funds (investment associations) instead of directly investing in companies to foster small and venture businesses. This is expected to enhance the role of IP investment as a crucial catalyst for future corporate growth.

IP guarantees involve guarantee institutions issuing guarantee certificates based on the value of a company’s intellectual property, enabling banks to execute loans based on these guarantees. The scale of IP guarantees increased by 13% last year compared to the previous year (878.1 billion KRW). This suggests that IP guarantees are effectively used as a financing method for early-stage startups that find it difficult to use collateral loans.

Mok Seong-ho, Director of the Industrial Property Policy Bureau at KIPO, stated, “IP financing is utilized as a means for companies to secure funding by recognizing the latent future value of their intellectual property. The Korean Intellectual Property Office will continue to support innovative companies so that they can smoothly raise funds through IP financing and sustain continuous growth.”

This content was produced with the assistance of AI translation services.