Rewriting The Rules Of Capital: The Rise Of IP As Insurable Collateral

by Joseph K. Hopkins | Forbes Finance Council Official Member

In today’s capital-intensive economy, innovation-driven companies often face a paradox: They own highly valuable intellectual property (IP) but struggle to secure the growth capital needed to scale. Despite the rising dominance of intangible assets, IP remains largely underleveraged in conventional lending.

Reimagining IP As Collateral

One way to address this gap is through a collateral protection insurance (CPI) program. Also known as an IP-backed non-dilutive financing program, this framework enables companies to convert their IP—patents, trade secrets, trademarks and proprietary designs—into insurable, collateral-ready assets. (Full disclosure: My company is a technology advisory and IP valuation firm that offers such a program.)

By wrapping IP in a custom insurance policy, these programs can lower lender risk and give institutional credit providers the confidence to finance against intangible holdings. The result is a structured, non-dilutive capital solution that lets companies raise funds without giving up ownership or control.

According to Ocean Tomo, intangible assets now make up over 90% of the S&P 500’s total market value—up from just 17% in 1975. Yet most firms still rely on traditional equity or debt, leaving their IP’s full potential untapped. CPI programs are built to change that, transforming innovation into investable capital and reflecting a broader market shift.

A Structured, Three-Phase Methodology

At the heart of the CPI program lies a rigorous process designed to elevate IP from a static asset to an active driver of capital access.

Phase 1: Borrower Profile And IP Readiness

The engagement begins with in-depth due diligence, where a valuation firm evaluates the borrower’s IP portfolio, financials, market position and organizational readiness. This process often yields tailored analyses, including a marketability profile, IP strength scorecards and competitive benchmarking to assess capital readiness and identify strategic funding opportunities.

Phase 2: IP Assessment And Valuation Report

The next phase involves the generation of an IP assessment and valuation report that anchors the program’s opportunity profile. Combining rigorous analytics with valuation methods like discounted cash flow (DCF), royalty rate analysis and market comps, these reports attempt to capture the full economic value of a company’s IP. They also provide insight into the borrower’s capital-worthiness, including management, financials and tech readiness.

The result is a dual valuation approach: fair market value (FMV), which captures the current market potential of the intellectual property, and orderly liquidation value (OLV), which estimates its recoverable worth in a downside or forced-sale scenario. These metrics play a critical role in shaping both insurance underwriting and lender credit terms. As leading valuation experts emphasize in strategic finance guidance, integrating both FMV and OLV helps ensure a financing structure that is firmly anchored in real-world asset value and designed to mitigate risk.

Phase 3: Advisory And Capital Facilitation

In the final phase of a typical CPI program, the firm implements the financing strategy alongside top-rated insurers, brokers and institutional lenders. A customized CPI policy helps insure the IP assets, reducing lender risk and enabling access to senior term loans through structured, capital-efficient credit facilities. This approach bridges high-value innovation with institutional capital.

This model aligns with a broader financial trend: the rise of private credit markets increasingly focused on nontraditional collateral, especially intangible assets like IP, as a key growth frontier.

Why CPI Programs Work

At its core, CPI programs de-risk innovation for both borrowers and lenders by converting validated IP into insurable collateral through a customized policy. This structure enables institutional lenders to confidently extend fixed-term loans, minimizing equity dilution—an ideal solution for fast-growing, innovation-led companies.

Key borrower benefits may include:

• Access to growth capital without equity dilution

• Faster time-to-market

• Higher valuations through IP monetization

• Increased confidence from investors and lenders

For lenders, the CPI policy redefines intellectual property from a traditionally illiquid and high-risk asset into enforceable, security-grade collateral. This shift marks a significant milestone in the evolving role of IP within the modern financial system. As noted by the World Intellectual Property Organization (WIPO), intellectual property should no longer be seen merely as a legal construct for protection but rather as a strategic financial asset central to long-term enterprise value creation.

Case Study: Millions Secured In IP-Backed Capital

A standout example of the impact of a CPI program is the fitness company behind a patented two-in-one elliptical cross-trainer engineered for both outdoor and indoor use. Leveraging the CPI framework, the company, a client of my own company, successfully secured a $5 millionstructured capital facility backed by its IP portfolio.

My company led the engagement from end to end, managing every stage of the transaction, from initial borrower readiness documentation and full IP valuation to coordination with insurance carriers and the lending partner. This structured, non-dilutive financing will enable the company to scale manufacturing, expand global distribution and drive customer acquisition.

Who Should Consider A CPI Program?

A CPI program is particularly well-suited for IP-intensive, capital-hungry sectors, such as:

MedTech: For example, Food and Drug Administration (FDA)-cleared devices backed by strong patent portfolios

GreenTech And Mobility: For example, innovators in clean energy and sustainable transport

Consumer Brands: For example, direct-to-consumer (DTC) companies with protectable product or packaging designs

Deep Tech: For example, artificial intelligence (AI), biotech and data science ventures

These industries tend to face high research and development (R&D) costs and often rely on robust IP to maintain a competitive advantage, making them ideal candidates for IP-backed financing.

Execution Ecosystem: Powered By Expertise

Companies pursuing CPI programs should partner with reputable valuation firms that offer access to a vetted network of insurance carriers, private credit funds, legal advisors and capital markets experts. These firms should also provide a secure virtual data room to streamline documentation and provide due diligence between borrowers and lenders.

Whether used to complement an existing asset-based lending facility or as a stand-alone financing path, CPI programs should deliver speed, structure and certainty.

Conclusion: Redefining Innovation Finance

In today’s idea-driven economy, IP must be treated as a strategic financial asset, not just a line on the balance sheet. CPI programs enable this shift, turning intangible assets into engines for growth. As IP continues to drive enterprise value, programs like these are leading the way via a proven framework, trusted partners and successful execution, one IP-backed deal at a time.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Read article on Forbes.com