Chinese Internet Industry’s IP Financing: Opportunity and Possibility

Abstract

The prominence of Intellectual Property (IP) assets in economic growth and corporate valuation has never been greater. For the technology- and innovation-driven Internet industry, IP financing plays an even more important role on raising funds for both start-ups and expansion. Yet, we are failing to tap into the full potential of IP assets, especially as a financing tool. IP is major assets or even only assets of Internet companies, thus they are missing valuable sources of capital that could be used for business expansion and innovation. Starting from the concept of IP financing, this article then gives a brief introduction to two Internet companies, which can be a sample of Chinese Internet Industry’s IP financing. They both have abundant IP assets and successfully got IPO on GEM board in December 2009. After that, this article specifically analyzes the selected patterns for Internet companies’ IP financing in China. That is IP pledge, IPO, and VC as well as IP securitization. Studying both the promise and the reality, it finally provides suggestions and solutions to the improvement on the above-mentioned financing patterns, hoping to promote the IP financing of Chinese Internet companies and thus encourage the progress of Internet Industry.