Imagine that you are in front of a venture capital fund presenting your startup. The investor begins to ask: is your technology your own? Do you have patents? How difficult would it be to copy your product? How much is your brand worth? How many people are part of your community and how loyal are they? They seek to know how much what you have built is worth and how difficult it would be to replicate it.
Let’s think about NotCo. When it reached a valuation of $1.5 billion in 2021, investors weren’t buying mayonnaise or hamburger factories. They were betting on a company that had developed its own artificial intelligence technology, a brand with recognition and enormous growth potential. The same goes for those who create large communities, software or proprietary technologies. Its value is often in assets that we cannot touch.
Now imagine that that same entrepreneur goes into a bank to ask for financing. The conversation changes. What property do you have? What guarantees can you provide? With what assets will you back the credit? And here appears one of the great paradoxes of technological entrepreneurship: what can make an investor value your company in millions does not necessarily serve to obtain a loan. We talk about the knowledge economy, but we still finance it, to a large extent, with traditional economic criteria.
The good news is that this is changing. In the UK, NatWest provided a £1.35 million loan to Shade Station using trademarks and proprietary software as collateral. In Hong Kong, a pilot program approved loans backed by intellectual property of up to HK$39 million. And now Chile is beginning to look in that direction: INAPI and WIPO announced a study to explore how industrial property could facilitate access to financing. It is a first step, not a credit already available.
Of course, a patent is not worth millions simply because it is registered, nor does a community of followers automatically become bank guarantee. You must demonstrate economic value, the ability to generate income and associated risks. We need reliable valuations, clear rules and prepared banks. A venture capital invests in growth potential; A bank must also evaluate your payment capacity and how to recover your credit. They are different perspectives, but not incompatible.
And here is, in my opinion, the real opportunity. A startup should not be forced to give up equity in its company every time it needs resources to grow. Financing with intangible assets could allow entrepreneurs to pass the valley of death and have operational continuity.
Chile has been promoting innovation for years. It is time to learn not only to protect ideas, but also to recognize their economic value and use them to finance the growth of those who turn them into businesses.
