Intellectual Property:Reflecting Value in Intangible Assets

One of the more challenging aspects of developing a company based on intellectual property assets is the challenge in valuing those assets for the purpose of both lenders and investors. As a general matter, the intellectual property assets created by a company are not reflected as having value on the company's books. As the WIPO primer on small business intellectual property business explains, "the practice of extending loans secured solely by [intellectual property] assets is not very common; in fact, it is practiced more by venture capitalists than by banks." Despite these accounting barriers, investors and lenders increasingly have come to value the potential of these assets.