As we move into the new year, entrepreneurs face tough times ahead, as finance experts are increasingly reporting that the historically low interest rates we’ve seen over the past few years are on their way out. After all, the Federal Reserve has traditionally bumped up interest rates to ease strong economic growth or curb inflation, whereas the more recent growth we’ve seen has mainly been due to supply chain issues. It’s a type of growth that isn’t expected to last, and in all likelihood, interest rates will soar over the next six months.
This also means that for business leaders, it will be far more challenging to secure funds. Not only will they have to deal with declining interest rates, but there are also potential regulatory issues that could make it harder for startups to secure funding. This is a major problem, as funding is often the biggest potential killer for a startup. In a recent report from CB Insights analyzing the post-mortems of several startups launched since 2018, the majority of them (38%) cited “running out of cash” or “failing to raise new capital” as the chief cause of their failure.
However, just because more traditional banks aren’t as viable an option doesn’t mean that startups have no means of securing funding. After all, many startups (especially tech companies) struggled to get loans anyway due to a lack of hard assets. So rather than a hindrance, this move away from traditional banking options serves as an opportunity for startups to monetize their most valuable resource: their knowledge. Or more specifically, their intellectual property.
We often think of intellectual property assets as just a way to protect our most valuable tech, but more forward-thinking businesses are able to use their IP to gain competitive advantages and drive new revenue opportunities. Companies can monetize and leverage their IP assets in a variety of ways, whether by selling, licensing, borrowing money, or building strategic partnerships with it. This is a big part of why we created PIUS: to position tech companies for growth by helping them monetize their most valuable resources.
Given that traditional banks are falling short of many startups’ needs, we’ll likely be seeing more business leaders looking towards more non-traditional forms of banking (like PIUS!) to generate funding and secure loans. So, if you’re a CEO, CFO, or other startup leader and you’re looking to the future of raising capital, it is time to move away from the traditional bank and look towards the wide range of inventive alternatives. When business leaders recognize the value of their IPs, they can better generate value from them, giving them the tools needed to secure the future of their companies.