Kay McCarthy, head of Jersey office at The International Stock Exchange, explores how intellectual property, software and brands are changing the way companies raise capital today
FOR much of modern financial history, a company’s ability to raise capital was closely linked to the tangible assets it owned.
Factories, aircraft, ships, machinery and commercial property formed the foundation of investment and lending, providing collateral that could be independently valued, financed and sold if necessary.
That model is changing. Today, many leading companies derive much of their value from intellectual property, digital platforms and specialised expertise rather than physical assets. Nvidia, for example, builds its competitive advantage on proprietary chip architectures and software, while Qualcomm and Arm have built successful businesses around licensing semiconductor intellectual property.
This reflects a broader structural shift in the global economy. According to the latest Intangible Asset Market Value Study published by specialist advisory firm Ocean Tomo, intangible assets accounted for approximately 92% of the S&P 500 market capitalisation by the end of 2025, compared with just 17% in 1975. The increase highlights how corporate value has shifted towards assets that do not fit easily within traditional accounting frameworks. Ocean Tomo describes this change as an “economic inversion”, reflecting the increasing influence of knowledge and intellectual capital on corporate performance.
The intangible economy
While manufacturing and physical infrastructure still play a fundamental role in economic growth, an increasing share of corporate competitiveness and business expansion is being driven by innovation and intellectual capital.
The shift towards a more knowledge-driven economy does not diminish the importance of traditional industries. Instead, business performance is increasingly shaped by a combination of physical infrastructure and knowledge-based capabilities.
This trend extends well beyond the technology sector. Coca-Cola’s global brand, developed over more than a century, remains one of its most valuable commercial assets, while Disney continues to generate long-term revenues from its portfolio of creative properties, including Marvel, Pixar and Star Wars.
Across the software industry, companies such as Microsoft and Adobe have built highly predictable subscription platforms, demonstrating how recurring revenue models can support resilient and attractive earnings. Similar dynamics are evident in healthcare, where pharmaceutical companies invest heavily in research and development, building portfolios of patents and other intellectual assets that can generate revenues over many years.
This is also reflected in broader business investment patterns. Research published by the World Intellectual Property Organization, the UN agency responsible for intellectual property policy and co-operation, shows that intangible investment has grown 3.6 times faster than tangible investment since 2008. In 2025, intangible investment across the economies covered by the latest WIPO analysis surpassed US$10 trillion, highlighting the growing importance of ideas, technologies and capabilities as drivers of future growth.
Rethinking corporate finance
As more businesses adopt asset-light models, investors and lenders are placing greater emphasis on recurring revenues, cash generation and the durability of future earnings. This has encouraged financing structures that allow companies to raise capital against assets and income streams beyond traditional physical collateral.
One early example came in 1997, when musician David Bowie issued securities backed by future royalty payments from his music catalogue. Known as “Bowie Bonds”, the transaction showed how contractual income streams could support capital markets financing.
Since then, similar approaches have been applied across a range of industries, with music catalogues, pharmaceutical patents and software revenues supporting structured finance and debt transactions. These structures demonstrate how assets that do not fit traditional collateral frameworks can still support borrowing.
Capital markets adapt
The changing nature of business models is also influencing how companies access financing. Stock exchanges and debt capital markets facilitate access to capital, while private capital providers offer alternative sources of funding for knowledge-intensive businesses.
High-yield bond markets and private credit provide flexible sources of finance for acquisitions, expansion and research and development. High-yield bonds can be particularly important for companies with limited tangible assets, as investors assess their ability to generate cash and service debt.
The growth of the private credit market has further broadened access to finance for companies whose value is driven by predictable earnings and differentiated business capabilities. By placing greater emphasis on cash flow generation and business fundamentals alongside traditional measures of creditworthiness, direct lenders have become a significant source of capital for these companies.
Private equity has reinforced this trend, with many sponsor-backed businesses accessing both high-yield bond and private credit markets to fund acquisitions and growth. For private equity investors, this has increased the importance of assessing intellectual property, customer retention and technology platforms alongside traditional financial metrics.
New sources of value
The influence of intangible assets is also becoming visible in sectors traditionally associated with capital-intensive operations. During the Covid-19 pandemic, several major airlines raised financing secured against their frequent flyer programmes. With aircraft grounded, investors recognised that these loyalty programmes represented valuable standalone assets capable of generating stable revenues through partnerships and co-branded financial products.
This illustrates how commercial value extends beyond traditional industrial infrastructure. A modern data centre, for example, represents a significant physical investment, yet its commercial significance increasingly depends on the software, data and AI workloads it enables.
Similarly, semiconductor fabrication remains highly capital-intensive, but competitive advantage across the industry increasingly depends on chip designs, process technology and other proprietary intellectual assets alongside manufacturing capacity.
Artificial intelligence is likely to accelerate this trend. Companies are investing billions in proprietary AI models, specialist software and unique datasets, creating new sources of differentiation and reinforcing the strategic importance of data as a corporate asset.
While these investments require substantial capital, much of the resulting economic value comes from software, data and proprietary know-how, highlighting the need for financing models suited to innovation-led businesses.
The valuation challenge
Determining the value of intangible assets remains one of the most significant challenges for investors and lenders. Their value often depends on factors such as technological development, legal protection and market demand, and can change rapidly over time. Patent protection can expire, software can become outdated and brands can lose relevance as consumer preferences change.
The challenge is compounded by accounting rules under which many internally generated intangible investments may be recognised as expenses rather than capitalised as assets. As a result, a company’s reported balance sheet may not fully reflect the economic value of its intangible assets and capabilities.
Robust valuation methodologies, legal frameworks and due diligence are therefore becoming increasingly important for investment analysis and risk management.
The next chapter
Throughout history, capital markets have evolved to finance successive stages of economic development. They supported the expansion of railways and heavy industry, enabled the growth of global aviation and telecommunications and helped finance the digital revolution. The growing importance of innovation-led businesses represents the next stage in that evolution.
As the global economy becomes increasingly knowledge-driven, financing models will need to adapt to evolving forms of collateral and new drivers of growth. Institutions that can effectively recognise and finance intangible assets will be better positioned to support the next generation of innovative companies.
The history of business finance has traditionally been written in steel, concrete and machinery. The next chapter will increasingly be written in software, research, data and ideas.
