Michael D. Moberly December 14, 2009 ‘A blog where attention span really matters’!
Most entrepreneur and startup management teams are familiar with their tangible – physical assets presumed necessary to their business’ success. Tangible assets are, after all, assets which can be seen, touched, and sometimes heard and smelled (e.g., equipment, property, inventory, labs, etc.).
Too, it’s impressed upon entrepreneurs early that tangible assets, in accounting and legal contexts, are reported on company financial statements and balance sheets thus, subject to measurement and/or monetization which prospective investors, i.e., venture capitalists’ and angel’s sense is integral to their invest – don’t invest constitution and exit strategy.
However, in entrepreneurial – early stage arenas, tangible-physical assets actually account for perhaps as little as 10 -20 percent of most startup’s real value, probable sources of revenue, and ‘building blocks’ for projected growth, profitability, and sustainability. In other words, it’s an economic fact today, that 80+% of most companies’ foundations for revenue lie in – directly evolve from intangible, not tangible assets.
As a participant, observer, and ‘listener’ to the entrepreneurial community for 20+ years, I respectfully find that numerous entrepreneurs have yet to achieve a sufficient operational – contributory familiarity for the various intangible assets they have produced and which have become embedded in – integral to their work product(s). For example, without prompting or preparation, I find many entrepreneurs can readily site…
- minutia of their company’s photocopying – printing costs.
- how much leasing wet lab space will cost, and other
- intimate (tangible) details regarding their startup’s expenditures to be reported.
Unfortunately, conversations with entrepreneurs seldom reveal a comparable level of understanding, appreciation, or enthusiasm about the intangible assets they or their company has collectively – individually produced. That’s particularly true when it comes to describing strategies for identifying, unraveling, valuing, utilizing, safeguarding, and/or seeking further commercialization of those intangible assets.
Again, my experience with entrepreneurs, start-ups, and early stage company’s and interactions with their management teams is that, in many instances, whether the company produces services or products, a significant and growing percentage of their value and sources of revenue, probably far higher than they expect, directly evolve from the intangible assets their company produces. Far too frequently, this economic fact – business reality is dismissed or goes unrecognized even as intangibles, i.e., their startup’s collective intellectual, structural, and relationship capital become embedded in their entrepreneurial spirit, passion, and hard work to try to make an idea, or innovation successful and profitable!