Can the finance sector put a price on researchers?

A report commissioned by the Intellectual Property Office – refreshingly written by two business authors – highlights some of the important gaps that must be addressed to promote university-business collaboration. The most obvious of these is funding.

Many worry these days about the availability of finance for innovative enterprises, many of which are small in size but have the potential to grow faster than established corporations. Many miss the trees while getting lost in the forest of financial options available to organisations, or wonder how the few that make it managed to navigate their way through the maze.

Luck may be a component, but the IPO report demonstrates that most successful contenders can articulate the value of what they offer.

Value in finance is a malleable concept; one that can be shaped to the object or activity that is to be financed. This explains why there are so many different types of finance and also why we hear continuous calls for new instruments of finance.

Assets guarantee that funders can recoup their investment to some extent, but assets aren’t always tangible. This is where the IPO report comes in, by considering new ways of giving these assets a value so they can be traded for funds to grow.

Most assets pertaining to research activity are intangible, making it at least as difficult for universities to access private funding for research as it is for small but promising businesses. In fact, the hurdle can be higher for universities because it is impossible to use the value of human resource, or human capital, as an intangible asset when seeking funding. I couldn’t put it better than the report itself: “Human capital is clearly one of the most important assets any business has, but it is not an asset that is legally owned by the business”.

Universities are not alone in facing this barrier, but so long as research is performed by researchers then universities, and the businesses working with them, will be affected by the problem. The solution is not to bring some form of legal slavery in research activity, but to find new ways of valuing intangible assets – including those embedded in people – that can be accepted as collateral for institutional funding.

Read the full report.

Rosa Fernandez is head of research at NCUB

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