The Korean Economic Forum
A Study for Improvement of IP Financing to Support Innovative Firms
Gemma Lee (Kyung Hee University)Year 2018Vol. 11No. 3
IP(Intellectual Property) financing refers to all financing activities based on theuse of IP assets (patents, trade marks, design rights and copyright) such astechnology financing based on technology credit ratings, IP-backed lending,IP-based VC(venture capital) investment, IP funds, listing on technologyspecial, etc. Although many different forms of IP financing exist, bank lendingbased on the technology financing counts on the significantly largest part of theoverall IP financing activities. In addition, the majority of government policiesalso centers on facilitating technology financing and IP-backed lending.However, it is well known that “investment” rather than “lending” is a morereasonable and efficient type of IP financing to enhance innovation. This studyproposes two ideas promoting the virtuous circulation of providing innovationcapital in the form of investment and IP financing quality growth. First, a largeamount of co-investment IP fund supply is needed by the use of public moneymatching private investments. This co-investment IP funds are structured toallocate a higher proportion of the returns to the private sector investors and agreater part of the losses to the public sector investors in order to provide apremium to private sector investors to compensate for the risk. Second, theactive exit market is necessary for the success of IP fund investment. Variousways of constructing an IP based stock index are proposed for the enhancementof the competitiveness of KOSDAQ as a technology leading stock market.