Since 2005, Ocean Tomo has reported that intangible assets are becoming increasing recognized as a catalyst for wealth creation and market value. New research continues to support this platform.
In a study released Tuesday by the TechAmerica Foundation, business expert Andrew Sherman urges big businesses to use a portion of its $2 trillion in “idle capital” to provide loan guarantees to banks that lend to Rapid Growth Enterprises—small to medium sized businesses driven by innovation and intangible assets such as high-tech patents.
According to Sherman, RGEs are responsible for nearly all of the job growth in the U.S. in recent decades but do not hold the tangible assets, such as cash and real estate, necessary to access debt capital in today’s cautious lending environment. The resulting credit gap impedes RGE growth, and ultimately dampens innovation, job creation, and economic recovery.
But according to Sherman, “America is sitting on more than $2 trillion in uncommitted cash – a tremendous amount of potential investment capital. A way forward is to create private-sector loan-guarantee funds that could leverage big business resources to jump-start growth.”
He argues for the creation of a PEPP (Private Employment Partners Program) model that would lower the risk of lending to RGEs by setting industry wide standards and methodologies for the valuation of intangible assets. Such a program would encourage businesses to provide loan guarantees to capital starved RGEs and allow for what he describes as “meaningful job creation, demand stimulation, innovation, and the harvesting of ripe intangible assets.”
A shift to an economy fueled by intangible assets requires a shift in way banks service capital needs. Sherman provides a compelling call-to-action for businesses to tap into the enormous wealth potential surrounding intangible assets and forces lenders to rethink the financing of innovation. Ocean Tomo supports the conversation.