Why Intangible Assets Should Be Recognized in New Business Launches…

Michael D. Moberly, Principal, Founder kpstrat and ‘Business Intangible Asset Blog – Business Intangible Asset Strategies and Risk Mitigator

Conventionally speaking, some ingredients considered essential to the launch of a new business, are conveyed as if they (the ingredients) are more tangible and physical, rather than intangible and non-physical. That’s unfortunate because, among other things, ‘perceiving the tangibility of the intangible’ will inevitably – invariably lead to overlooking – dismissing the contributory roles – value adds of business things intangible.

The successful launch of most new businesses today and for the foreseeable future, (irrespective of sector or stage, etc.) in large part lies in recognizing that business economics – operations are increasingly intangible asset intensive, dependent, and reliant.

This which translates to…

  • 70+/-% of most business’s (initial) valuation, competitiveness, and revenue generation capability-capacity lie in – directly emerge from intangible (non-physical) assets, e.g., various forms, contexts, and applications of…
  • intellectual (knowledge, knowhow) capital,
  • structural (process, procedure) capital,
  • relationship (association) capital, and
  • how each may-can converge (collectively, collaboratively, productively) as effective and productive business operating cultures.

Of course, there are arrays of other – additional – complimentary ingredients (arguably essential to new business launches) which thousands of published books, articles, dissertations, and thesis variously argue.

But, there should be little debate the business things intangible described here, contribute to…

  • generating confidence (internally) for the business developers of a new business, and (externally) to prospective investors.

Too, the ‘three’ intangible assets described above, which I repeatedly draw readers attention, are observable and assessable with a modicum of due diligence, for those who are receptive.

Please consider, for example...Elizabeth Holmes and the Theranos trial (allegations, indictment) wherein prominent investors (and others) gave depositions and/or testified with embarrassment. Unarguably, the absence of (Theranos’) foundational – underlying intangible asset probably should have translated as ‘adverse signals’, but, for various reasons, were variously overlooked or dismissed in favor of dubious glitter, ala ‘fake it till you make it’.

Again, my experiences – observations in numerous venture capital forums, new business ‘launch teams’ (bio med-tech sector primarily) described the (a.) unique importance and scalable relevance of their ‘idea’, (b.) underlying – supporting R&D, and (c.) business plan – ROI rationale to compete for, what each presenter universally hoped, would be, their initial foray to attract VC investment.

Routinely, but unfortunately (in my view) launch team presenters – speakers would omit – overlook, recognition for the ‘mission essentiality’ of particular-intangible assets their business was…

  • (proprietarily) developing and which their business venture was dependent – reliant, that is,
  • aside from the obligatory (conventional) referencing the status of IP (intellectual property) which they may have as ‘provisional’, which was
  • frequently conveyed (sophomorically and presumptively) as being all inclusive and protected commodity.

Standing alone, seldom does IP achieve either. To be sure, provisional – conventionally issued IP has relevance as a defensible ingredient to a successful launch.

Experientially again, I argue that recognizing – unraveling the origins, proprietary development, defensibility, and unique application of specific intangible assets are also key (observable, verifiable) ingredients to paving a more viable – probable and sustainable path to a successful launch.

Unfortunately, proprietarily developed – held intangible assets are often under-recognized and under-valued.

Readers of Mr. Moberly’s – kpstrat’s ‘Business Intangible Asset Blog’, are respectfully encouraged to review other posts, wherein arrays of issues related to business things intangible are experientially researched and authentically and practically expressed.

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