UK government announces expansion of guarantees to support IP-rich SMEs

The UK has built a sterling reputation for innovation and entrepreneurship with a burgeoning start-up ecosystem. Where the UK has struggled though, is with the “valley of death” as those young companies try to navigate from concept to commercial application. However, small businesses with strong IP portfolios may soon find it easier to secure funding from lenders, following an expansion of government support announced by the Chancellor of the Exchequer on 13 July.

The headline news revolves around the existing Growth Guarantee Scheme, which provides government guarantees for lenders lending to SMEs. Of particular note is the earmarking of £500 million under the “ENABLE Guarantee” specifically for “lending to SMEs and scaling firms that are rich with innovative intellectual property (IP)”. 

The package announced is being targeted at AI innovation, but this expansion is very relevant to SMEs in climate tech and deep tech sectors. These companies are often buoyed by substantial value in their IP but typically own fewer physical assets at the outset. SMEs in these sectors have often been able to secure investment based on their patent portfolios, which “lock in” value from their core innovation and research in a tangible way and form a core part of any good investment pitch. Hopefully this expansion of the ENABLE scheme will result in UK tech-focused SMEs having an easier time securing financial backing from traditional lenders as one source of funding their businesses.

Whilst investors have long recognised that a strong IP portfolio provides substantial value in protection of innovation from copycats and competitors, it is good to see recognition of the tangible financial value such a portfolio can offer. Through this package, there is the potential of a mechanism for assisting even pre-revenue businesses to use their IP directly to help secure funding to finance their future growth.

GJE is experienced at supporting early-stage UK companies in protecting their IP and with providing due diligence reports for prospective investors. If you would like to discuss your business’s IP needs, please contact your usual GJE attorney, or email gje@gje.com.