Unchartered

Just the other day, I hear through the grapevine that an ‘IP Expert’ was claiming that all those intangible assets on a unicorn’s balance sheet could be subscribed to intellectual property.

Heads a’nodding in the audience, and not a single unchartered accountant among them.

Pre-listing, all that unaccountable value can be happily accounted for by the premium for control that VC’s pay for with their liquidation preference shares. The actual value is the sum of the liquidation preferences and not the headline value.

After listing, the unaccountable balance sheet value is really just the NPV of the hopeful (one might say, dementedly so) projection of future exploitation and monopolization by the company of it’s customers in what is virtually a capital-unconstrained model of product and market development.

I wouldn’t call it intellectual property in any scenario.

Interestingly, the sum of the value of all the unicorns might be achievable. But unfortunately that value will only be achieved by a small number of them and the rest will tank.

This is another good argument against any demented ideas of hypothetical intellectual property.