In today’s rapidly evolving global market, tangible assets alone no longer define a company’s potential. As innovation and creativity become the cornerstones of the economy, a new financial mechanism is emerging: intellectual property (IP)-backed finance. The Sungkyun Times (SKT) aims to explore this novel financing approach by examining its current landscape, challenges, and future outlook.
Ideas Are the New Capital
-Turning IP into Power
IP finance refers to the practice of leveraging the economic value of intellectual property — such as patents, designs, or copyrights. It enables companies with limited physical assets to secure funding through the value of their IP. For instance, a biotech company holding a patent for a cancer treatment may not own physical assets, but its IP could still be worth millions. Key types of IP finance include IP-collateralized loans and direct IP investment. IP-collateralized loans allow companies to use their IP as collateral to borrow capital from banks or financial institutions, even without owning physical assets like buildings. In contrast, direct IP investment involves venture capital firms or private investors providing funds to companies that hold high-value IP. These mechanisms are reshaping how value is recognized in today’s economy. In this way, IP is becoming a powerful driver of financial and trade value. Ultimately, it allows idea-rich companies to access global trade by leveraging the value of their IP.
-When IP Crosses Borders
Growing interest in IP-backed finance gained momentum during the Trump administration, when the United States imposed high tariffs on key trading partners. As a result, it became more difficult for countries to trade physical goods as before, prompting many to seek alternative forms of trade that relied less on tangible products. In response, many countries began to show interest in intangible assets such as ideas and designs. Unlike traditional goods, IP can be shared or sold across borders without being affected by shipping problems or political tensions. Korea, with its globally competitive technological and cultural industries, has been at the forefront of this transformation. Yu In-chon, the Minister of Culture, Sports and Tourism, announced that Korea’s content exports reached ₩18.38 trillion in 2022, driven by the global popularity of K-pop, K-dramas, and gaming. Also, intellectual property filings surpassed 560,000 in 2024, a 0.7% increase from the previous year, according to the Korean Intellectual Property Office (KIPO). As the global economy pivots from tangible assets to knowledge-based capital, Korea’s focus on IP-backed finance shows how countries are adapting to trade in smarter and more flexible ways.
Collateral or Catastrophe
-Borderless Assets, Limitless Potential
As IP-backed finance emerges as a powerful alternative to traditional capital systems, its advantages are coming into sharper focus. Firstly, IP-backed finance bypasses tariff restrictions that affect traditional exports. Unlike physical goods that are subject to regulations, intangible assets like music can move across borders instantly through digital platforms. This allows IP-backed finance to remain resilient even in times of global disruption. A prime example is HYBE, the entertainment powerhouse behind South Korea’s top male idol group BTS, which has successfully translated its IP into sales through global streaming platforms. In 2024, HYBE’s total revenue reached approximately ₩2.25 trillion, driven significantly by these IP based channels. For startups, especially those in creative and tech industries, this form of finance offers a lifeline, since many struggle to secure traditional loans due to a lack of physical collateral. Because IP-backed finance relies on ideas rather than tangible assets, it offers a viable funding path for companies with innovation but limited infrastructure. In particular, the KIPO has implemented initiatives like the IP Stepping Stone Program, offering tailored consulting, education, and funding support to help aspiring entrepreneurs identify, register, and commercialize their IP. According to the Korea Institute of Intellectual Property (KIIP), intangible assets accounted for approximately 8% of South Korea’s Gross Domestic Product (GDP) in 2024, reflecting continued investment in software, design, and branding. Ultimately, IP-backed finance democratizes capital access, transforming intangible ideas into tangible growth for future innovators.
-When Value Becomes Vague
Despite its advantages, IP-backed finance faces major structural challenges, starting with the issue of valuation. First, IP valuation remains inconsistent across institutions, industries, and even countries. There is no universally accepted standard for measuring the financial worth of IP, making it difficult for banks to assess loan risk with confidence. Furthermore, valuation methods often overlook external factors such as market volatility and future licensing potential. According to Licensing Executives Society International, even small changes in these inputs can lead to drastically different valuation outcomes, making the process highly subjective and prone to error. This can lead to either overvalued assets or missed funding opportunities. Eventually, this skepticism makes it harder for lenders and investors to trust IP values, slowing the growth of Korea’s IP f inance system. In addition, lacking a secondary market and clear backup plan, lenders remain cautious about offering IP collateralized loans. In an interview with the SKT, a research associate in IP remarked, “In Korea, the lack of a secondary market for intellectual property makes it difficult for investors to exit safely, which is why many financial institutions remain hesitant to treat IP as reliable collateral.” This shows that even in an innovation-rich economy, the absence of market mechanisms to support IP liquidity can undermine the growth of IP-backed finance. These challenges must be addressed promptly for IP-backed finance to mature into a reliable financial model.
Strengthening the IP Finance Ecosystem
-Laying the Groundwork for Trust
To address underlying problems, there are several potential solutions. Government agencies can play a key role by certifying valuation professionals and establishing transparent guidelines tailored to different IP types. For example, the IP Financing Scheme led by the Intellectual Property Office of Singapore certifies official IP valuation entities and requires them to assess value based on standardized metrics, including marketability, technological uniqueness, and income potential. Building on this model, Korea could establish a KIPO-led national IP valuation system with evaluator training, sector-specific guidelines, and a centralized database to enhance transparency. Additionally, Korea should promote a government-backed secondary market platform, where certified IP assets can be traded. The government should offer credit guarantees or loss-sharing mechanisms to participating lenders to reduce risk. For instance, the United Kingdom’s Intellectual Property Office, a government body that encourages IP-rich f irms to commercialize their rights through licensing deals and auctions, is supported by legal clarity and institutional backing. By enabling certified IP to be resold or monetized on regulated platforms, banks are more likely to accept it as credible collateral, making IP-backed finance in Korea safer and more reliable for turning ideas into businesses.
-Korea’s Global Ambition
Korea is no longer just adapting to the digital economy — it is aiming to lead it. IP finance aligns seamlessly with digital trade frameworks like the Digital Economy Partnership Agreement (DEPA), which are shaping the rules for future global trade. Korea’s official accession to DEPA in 2024 marked a turning point, signaling its ambition to become Asia’s central hub for digital innovation and IP trade. Moving forward, Korea is expected to play an active role in setting global standards for IP governance, digital asset recognition, and ethical data usage. Moreover, emerging technologies like non-fungible tokens (NFTs) and artificial intelligence (AI) continue to enhance IP’s liquidity and utility. This tokenization allows fractional ownership, where multiple investors can hold stakes in a single piece of IP. In comments shared with the SKT, a fintech strategist noted “Until now, IP investment was something only large firms could access, but decentralized finance makes it possible for smaller investors to participate.” In the near future, there will be Korean creators and startups accessing capital not through traditional assets like buildings or machinery, but through patents, algorithms, music rights, and even AI-generated content. Such a shift would not only support the startup economy, but also redefine how innovation is measured, funded, and valued in Korea.
Imagine a world where an idea becomes the engine of trade. IP-backed finance marks the beginning of a new chapter in the global economy. For Korea, this shift offers a unique opportunity to turn creativity into capital. Kingos — take the first step and let imagination drive progress forward. Those who invest in ideas today will lead the markets of tomorrow.