Keep the wheel turning: invent – finance – innovate

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Employ your Intellectual Property (IP) assets' value to finance further innovation and, while creating new IP values, lay the foundation for the next funding. The Global Innovation Index 2020 shows the importance of obtaining venture capital from investors. 

On September 2, the World Intellectual Property Organization (WIPO) published the 2020 edition of the agency's Global Innovation Index (GII), which provides an international ranking of the top global economies in terms of their innovation performance. The theme of this year's Index, the 13th annual GII released by WIPO, is "Who Will Finance Innovation?" The GII includes data on declines to venture capital and other innovation funding sources. This focus on the increasingly critical need to obtain funding for R&D has taken on much greater importance during the COVID-19 pandemic. One of the key findings driven home by the 2020 GII is that innovation economies are typically strongest in countries where citizens enjoy higher earnings. The Index includes rankings for innovation economies both overall and then by income group. It is very telling that the top 10 innovation economies among high-income countries are the same list of the top 10 innovation economies for the entire GII. By contrast, other income groups' leading innovation economies tend to move down the overall rankings as revenue drops. For example, the best innovation economy among upper-middle-income economies is China, which ranks 14th overall. Vietnam leads lower-middle-income countries at 42nd overall, and Tanzania leads low-income economies at 88th overall. The clear indication is that innovation is more potent in economies where market players have more money to pay for it.

R&D investments to turn ideas into inventions

The study reveals how cyclical R&D investments across the globe have stagnated since 2011, while investment in business R&D has reduced over the same time. Since 2010, global GDP rates have been on a sizable decline from a spike the world experienced after getting past the Financial Crisis in the late 2000s.

Much of these issues can be tied to declines in venture capital funding, reductions that will almost certainly be greatly exacerbated during the COVID-19 pandemic. Projections moving forward expect a massive drop in venture capital owing in large part to economic disruptions posed by the global COVID-19 health crisis.

Fostering innovation

One key recommendation from the WIPO's Index focuses on a need for global leaders to respond to the pandemic with policies designed to overcome the adverse effects of COVID-19 by fostering venture funding in key sectors. VC-friendly policies in innovation hot spots found in the U.S., China, Singapore, Israel, and elsewhere, for example, are expected to help those regions bounce back more quickly from the pandemic. Further, the GII notes that the global innovation landscape has been shifting. Despite the low overall rankings for lower-income countries, developing nations have been contributing a more significant share of global innovation. For example, of the 25 economies identified by the GII as outperforming on creation relative to the economy's development level, the most significant share of these countries comes from Sub-Saharan Africa, home to eight such outperforming nations.

Although encouraging venture capital funding is an important policy goal for nations who want to improve their innovation economy, VC funding often represents a crucial infusion of lifeblood for small business entities. R&D funding is life or death for some firms that are leaning towards a commercialization pathway for new products or services. Without this infusion of money from outside investors, even the best business ideas and innovative platforms can wither away to nothing.

IP is an asset

Yet many companies, especially those that are navigating the world of IP for the first time, face various issues making proper IP management feel impractical. Because IP assets' value is often tied to intangibles like brand recognition or productivity enhancement, it is challenging to determine those assets' exact value in dollar amounts. This difficulty is made even more problematic by the increasingly important role that IP has in the global economy, due in large part to the growth of business models that flourish by realizing IP value both internally and externally through such activities as licensing.

Expertise is invaluable when trying to participate effectively in the incredibly complex global framework for IP. Many businesses will choose to collaborate with firms like Dennemeyer that offer a wide range of solutions tailored for better global IP management.

Access to funds and secure liquidity: use your IP assets

In an independent IP valuation, experts produce a technical report monetizing patent assets according to valuation standards, e.g., the widely accepted DIN 77100. The report gives a firm a great deal of leverage in the marketplace when requesting additional money, selling intangible assets or negotiating other kinds of arrangements and deals. Understanding the value of your company's IP assets requires an ability to recognize where the future is taking your industry and finance and protect this way forward to cut ties that are unnecessarily weighing on the company's bottom line. 

The world's innovation economy is growing, and the most successful companies moving forward will be those that are most effective at financing their R&D and inventing activity. With Dennemeyer as your global partner, you will be able to swiftly address the marketplace with the concrete knowledge of your IP's value and the confidence that comes from trusting that your IP management activities are in expert hands. The COVID-19 crisis will impact innovation and leaders need to act as they move from containment to recovery. Innovation finance declines in the current situation, but there is hope, too.