Loan secured against IP?

[ReaderScars]

Is it possible to secure finance which would be used to develop and manufacture a novel product, using the IP based around the product as security?

Would the IP have to be in place first, or would it be acceptable to have evidence that searches prove there is no prior art, and then use some of the finance to secure the IP?

[WindyCommon]

It's a nice idea, but there's zero chance of debt finance on this basis from a mainstream lender.

Friends? Family?

If your idea is really good - not easy for someone else to develop or replicate, and commercially monetisable - then you could take a shot at raising equity finance, perhaps through local "business angels". This means selling some part of your business and its earnings up front.

Stranger things have happened, but in general terms it is very hard to secure independent financing for idea development.

[Steve Campbell]

What value would you place on the IP on its own, and how are you justifying that value in order to use it as security ?

I'm no expert in this, but I'm guessing not a single hope in hell given its worth nothing at the moment. I'm pretty sure you can't use something as security on what it might be worth in the future if all the stars align.

[Cheib]

A problem with IP when it's an idea and not a proven asset that's generating cash-flow is that someone nicks the idea off you you're going to have to hire a very expensive IP lawyer to defend the IP. The IP is only as good as the lawyer you're paying effectively!

And back to the original question...I would say impossible from a traditional lender or any of the new SME lenders that are around. Only option would be a HNW I would say.

[ReaderScars]

Thanks for your thoughts and comments; had a quick look at this and it would seem that it *may* be possible to borrow against IP but only if that is already a successful product/process which is already well established and part of a liquid business.

The search continues.

[egomeister]

ReaderScars said:

Thanks for your thoughts and comments; had a quick look at this and it would seem that it *may* be possible to borrow against IP but only if that is already a successful product/process which is already well established and part of a liquid business.

The search continues.

At the moment you are effectively asking someone to lend you money secured nothing more than an idea. Flip it the other way, would you lend money under those conditions?

What level of funding are you trying to secure?

[ReaderScars]

Finger in the air figure is less than £30k mainly for machining tool/moulds and manufacturing.

I'm still pulling in quotes or rather, trying to establish what an honest cost would be for machining the tooling, hence the approximate figure.

[egomeister]

I suspect the most likely route at this time is to self fund, and friends and family. Essentially you need someone who will back you personally and have trust in you that you can deliver what you say. Even if you can't self fund to production, could you get a prototype together so that you can at least demonstrate the product and begin to work on sales?

[ReaderScars]

egomeister said:

could you get a prototype together so that you can at least demonstrate the product and begin to work on sales?

Already at that stage - was advised to protect the concept by various business owners in that sector at a recent trade show. There was interest and encouragement but no offers to partner/collab/invest.

I think there may be some new funding being disbursed over the next month or two. Will keep looking for a potential partner in the meantime.

[TooLateForAName]

ReaderScars said:

Already at that stage - was advised to protect the concept by various business owners in that sector at a recent trade show. There was interest and encouragement but no offers to partner/collab/invest.

I think there may be some new funding being disbursed over the next month or two. Will keep looking for a potential partner in the meantime.

I think that the fact that you've shown it to people makes it too late to patent.

The reality is that IP protection is down to the size of your pockets and even that won't count for much if a chinese supplier sees a market in it.

[ReaderScars]

I've only exposed about a third of the number of components I've designed, so the remainder can still benefit from protection. The overall concept isn't new or novel, rather the configuration of the components.

Regarding the Chinese aspect (ie, blatant ripoff of other people's designs), are you familiar with Stickbox?

Someone designs a smartphone case which incorporates an extendable aluminium selfie stick. Launches on Kickstarter, backers love it, hits his campaign target.

Before he's even received his first shipment, which his backers agree to buy at $40, his product's being sold in Alibaba for $10. Que demands to cancel from many backers.

http://www.stikbox.com/
https://www.kickstarter.com/projects/634593202/sti...
https://petapixel.com/2016/10/21/popular-selfie-st...

[foliedouce]

Your pension can lend up to 50% of it's fund secured on IP

[ReaderScars]

foliedouce said:

Your pension can lend up to 50% of it's fund secured on IP

I'm surprised - thought there would be restrictions.

I know the question might be, 'if the concept is such a guaranteed success, why not use your pension?' but I think there are other options at this stage.