A Study On Securitization Of Intellectual Property For High Technology Financing

Asset-backed securities are among the latest financing creations of innovative financiers, yet they have already exerted far-reaching influence to the financial market. Securitization is the process by which assets, previously held to maturity on the balance sheets of financial intermediaries or other types of holders, are sold in capital markets. For those high technology companies, asset-backed securities transactions may be a viable form of alternative financing, which also provided them with tenacity to work through intricacies in traditional financing methods. Start with David Bowie issuing the first music royalties future receivables securitization’as bonds in 1997, IP-backed securities is such a newly-developed technology that it still lack further research. This essay will mainly focus on this issue.One of the principal criticisms of the IP securitization, as we propose it, is that the risk is somewhat hard to control. On the other hand, valuation of intellectual property is still a problem. This essay briefly explores the process of IP securitization and the difference between IP securitization and asset-backed securitization. More to the point, this essay discusses the principle of IP securitization. For the valuation of intellectual property, this essay discusses the importance of valuation of intellectual property and followed by a discussion on the various methods of valuation and recent developments in the area. Black-Sholes equation as a newly-developed method to evaluate real options is also is also an innovative part of the essay.