WIPO Chief Daren Tang Advocates Using Intellectual Property as Loan Collateral to Boost Italian SMEs

Daren Tang, Director-General of the World Intellectual Property Organization (WIPO), recently visited Rome to engage with institutional representatives and participate in a Luiss Business School conference focused on intangible assets. In an exclusive interview, Tang detailed plans to promote the use of intellectual property (IP) as collateral for business loans, a move that could unlock new funding sources for Italian small and medium-sized enterprises (SMEs).

Tang explained that WIPO is collaborating with Confindustria, Italy’s leading business association, and Luiss Business School, which has been working with WIPO since 2023 through the Global INTAN-Invest research program. This program measures and monitors investment in intangible assets globally. The current study by Luiss is assessing Italy’s strengths and gaps in leveraging IP for financing.

"Innovative entrepreneurs should be able to access funding by capitalising on the strength of their ideas and their creativity, not just on the tangible assets they own," Tang said. He highlighted that SMEs represent 99 percent of Italian businesses and employ over 75 percent of the workforce. Italy ranks second in the European Union for trademarks and designs and fifth for patents, underscoring its innovation capacity. However, much of this intellectual property remains underutilized as collateral for loans.

Tang identified three primary obstacles hindering the use of IP in financing. First, many credit institutions lack the expertise and tools to accurately value intellectual property as a financial asset. Second, the valuation process can be complex and costly, especially for smaller loans. Third, the legal frameworks and markets that support IP as collateral are fragmented and underdeveloped across Europe.

To address these challenges, WIPO is assisting lenders in understanding IP better, building local valuation expertise, and supporting practical initiatives that allow lenders to gain experience with IP-backed loans. Tang cited a UK pilot scheme launched by NatWest bank, which has granted over 20 loans secured by intellectual property since its inception.

"The opportunities in this field are considerable, particularly for an economy such as Italy’s," Tang noted. He stressed that the goal is not to create more IP but to make the existing value more visible and usable in financial markets. WIPO and Confindustria are actively seeking partners to develop pilot projects in Italy.

Tang also emphasized the importance of creating financing instruments, including venture capital and debt, that enable European innovators to fund and grow their ideas domestically. "Otherwise, European innovators will look elsewhere in the world to find the funding they need to grow," he warned.

Reflecting on Italy’s historical innovation legacy, Tang remarked, "The modern intellectual property system was established in Venice in 1474. Now you need to ensure that you pay attention to intellectual property and innovation policies, and that these also become an explicit part of public policy."

WIPO data indicate that Italy is among the few advanced economies where investment in tangible assets has grown faster than investment in intangible assets over the past decade. Tang views this as a trend to monitor carefully. In Italy, investment in tangible assets accounts for about 15 percent of GDP, while intangible asset investment is around 9 percent. By comparison, Sweden’s intangible investment stands at 17.4 percent of GDP.

"There is no automatic link between higher investment in intangible assets and faster economic growth, particularly in the short term. But the positive signs are clear," Tang said.

On the topic of artificial intelligence and copyright, Tang acknowledged the risk of a fragmented global system due to differing approaches by the US, Europe, and China. He called for continued dialogue among member states on policies and regulations, alongside collaboration among creators, rights holders, and AI developers to build interoperable practical tools and standards.

This comprehensive approach aims to balance innovation, legal certainty, and the protection of intellectual property rights in an evolving technological landscape.