Intellectual Property (IP) is recognized as one of the most critical assets in today's business environment. IP Guarantees are a financing method that supports corporate funding based on the value of this intellectual property. This column will delve into the concept and importance of IP guarantees, the benefits they offer businesses, and how to utilize them effectively.
What is an IP Guarantee?
An IP Guarantee is a financial mechanism where a guarantee institution (such as the Korea Credit Guarantee Fund - KODIT, or the Korea Technology Finance Corporation - KIBO) assesses the value of a company's intellectual property and issues a guarantee certificate. Based on this certificate, banks execute loans. In essence, it's a system where IP serves as collateral, helping companies secure necessary funds. The primary subjects are a company's innovative assets like patents, trademarks, copyrights, and design rights.
The value of intellectual property extends beyond mere ownership of a patent right; it is determined by various factors including its commercialization potential, technological maturity, and market competitiveness. Therefore, IP guarantees play a crucial role in enhancing a company's financial liquidity by combining technology assessment with economic valuation.
Why are IP Guarantees Important?
- Funding Support: Startups and Small and Medium-sized Enterprises (SMEs) that may struggle with traditional collateral-based loans can secure funds based on the value of their IP. For companies lacking tangible collateral, IP guarantees serve as an innovative alternative.
- Promotion of Innovation: By recognizing the economic value of intellectual property, companies are encouraged to focus more on R&D, thereby accelerating technological development. This strengthens corporate competitiveness and contributes to national industrial advancement.
- Enhanced Credibility: A guarantee from a recognized institution boosts a company's credibility and simplifies the procedures required for loan execution. This sends a positive signal to investors and partners, improving the company's reputation.
Introduction to Representative IP Guarantee Products
1. Preliminary Guarantee for Pre-founders (예비창업자 사전보증)
- Overview: This program conducts a technology assessment during the startup preparation phase, suggests a potential funding amount, and provides immediate guarantee support upon incorporation. It contributes to fostering a startup-friendly atmosphere and building a tech-finance ecosystem.
- Eligible Applicants:
- General Startups: Pre-founders with excellent technology and ideas; those planning to commercialize patents, utility models, etc., registered within the last 2 years; participants in innovative growth industries, winners of startup competitions, etc.
- Professional Startups: Prospective founders with professional expertise, such as professors, researchers, or certified professional engineers.
- Procedure:
- Technology Assessment: Evaluates the technological innovativeness based on the technology business plan.
- Funding and guarantee amounts are matched and provided post-incorporation.
- Guarantee Limit:
- General Startups: Up to KRW 500 million
- Professional Startups: Up to KRW 1 billion
- Features: This product offers substantial help, particularly to companies facing early-stage funding difficulties. As support is provided pre-incorporation, it addresses the issue of limited commercialization opportunities due to initial capital shortage.
2. Intellectual Property Guarantee (지식재산 보증)
- Overview: Targets companies generating excellent IP, providing funds needed for R&D, technology transactions, commercialization, and utilization promotion.
- Support Stages & Funds:
- Creation Stage: Development funds, additional development funds, prototyping funds, etc.
- Commercialization Stage: Production funds, marketing funds.
- Utilization Promotion Stage: Acquisition funds, royalties/license fees, etc.
- Guarantee Products & Limits:
- IP-R&D Guarantee: Up to KRW 500 million
- IP-Transfer Guarantee: Up to KRW 300 million
- IP-Commercialization Guarantee: Up to KRW 1 billion
- IP-SMART Guarantee: Up to KRW 1 billion
- IP-Value Guarantee: Up to KRW 300 million
- Application Example: This guarantee is particularly suitable for R&D-intensive companies. For instance, it is advantageous for securing production and marketing funds based on patents for which technological development has been completed.
3. IP-Plus Guarantee (IP-Plus 보증)
- Overview: Supports funds needed for business expansion using IP, linked with IP-collateralized loans from financial institutions.
- Support Structure:
- An SME applies for an IP-collateralized loan from a financial institution.
- The financial institution executes the loan and then requests a guarantee from KODIT.
- KODIT issues a guarantee certificate, enabling additional loan support.
- Guarantee Limit: Up to KRW 1 billion
- Preferential Terms:
- Guarantee Fee Discount: 0.2%p reduction
- Guarantee Ratio: 90% coverage
- Key Advantages: Enables rapid loan execution through cooperation with financial institutions and maximizes the utility of IP-collateralized loans. It specifically offers an opportunity to leverage IP without relying on traditional tangible asset collateral.
4. Technology Growth Support Program (기술성장 지원 프로그램)
- Overview: Provides funds necessary for the R&D and technology commercialization of innovative technology startups.
- Support Stages:
- R&D Stage: Research and development funds.
- Commercialization Stage: Commercialization and marketing funds.
- Product Types:
- Tech-R&D Guarantee: Up to KRW 500 million
- Tech-Commercialization Guarantee: Up to KRW 1 billion
- Special Conditions: This program selects excellent companies through a technology capability assessment, offering high credibility and long-term financial support. A key feature is enhancing fund utilization through linkage with government R&D projects.
Conclusion
IP guarantees are more than just a financial support mechanism; they are a vital system that recognizes the value of intellectual property and supports corporate sustainability based on it. They have become an essential financial tool, particularly for technology-driven startups and innovative enterprises. We encourage you to actively utilize the diverse range of guarantee products to maximize your company's growth potential.
If you require more information on IP guarantees or need tailored solutions, Pine IP Firm is here to assist you, from the initial steps of securing an IP guarantee to its successful utilization.
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