Investor Recognition of Intangible Assets in play…

Michael D. Moberly, Principal, Founder, kpstrat

An important perspective…every investment in startups and early stage businesses, which I am familiar, is obliged to recognize, first and foremost, the investment is intangible asset intensive and dependent.

The various forms, contexts, and applications of intellectual, structural, and relationship capital, (business things intangible) which a startup, early stage, and maturing business’s leadership assembles and collaborates, and probably still developing and honing, conveys their unique attractivity to and structure for external investment…

  • 80+/-% of most business’s value, competitiveness, revenue generation capacity, and sustainability, etc., derive directly from things intangible.

For prospective investors…distinguishing (assessing, measuring) the (potential) contributory role + value (in ROI terms) of particular ‘mission essential’ intangible assets…relative to,

  • how and when either is to be exploited, i.e., commercialized, monetized.
  • projected investment ROI + exit strategy.

Either, are (fiduciarily) obliged to not be overlooked nor become subordinate or passive to particular-law or accounting conventions, ala past practice. Intangibles now, and for the foreseeable future are straight-up business considerations.

Now, consider please, the various contributory rolesand value of business things intangible to – for (a.) business performance + sustainability, and (b.) investor exit strategy. etc.

  • if – when either are left un-recognized and/or un-distinguished, etc., vis-à-vis investment strategy or deference given to convention and/or past practice wherein the relevance of business things intangible are conveyed in narrow accounting or IP (intellectual property) legal contexts.

In these circumstances, unfortunately, mission essential intangibles can unnecessarily dissolve or fade away. Please recognize, there is no shortage of clear – convincing examples in which valuable – competitive advantage intangibles, left adrift by one business, resonate with a competitor(s) wherever competition emerges globally and be leveraged + applied by competitors, to their advantageand benefit.

It’s plausible then, ifwhen investors (conventional or venture capital) recognize business things intangible, as I am endeavoring to convey here, will (a.) favorably influence achieving a preferred outcome, by (b.) mitigating risk to outcome essential intangible assets, especially if (c.) executed in advance of an investment, and/or initiated as mid-investment corrections. Doing so, can, and probably will, be a good thing, i.e., contribute to the viability – sustainability – resilience of an investment ala ROI + exit strategy. Its’ all good!

As for business things intangible the various forms, contexts, and applications of intellectual, structural, and relationship capital, are ‘irreversible embeds’ in every business transaction which I, and probably you are familiar. Let it be done.

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