Rich Assets – Welcome Inside the New Intangible Asset Revolution
Written by Don Diduck, (Edited by Sharon MacLean and Robert McGarvey)
You’ve got hidden gold inside your company – and may not even realize it.
This “gold” is known as Intangible Assets.
Most accountants classify Intangible Assets under the general categories of goodwill, patents, and ideas. However, they’re much more diverse and specific today. And, they are valuable and some of the biggest companies are creating them.
Think Google, Amazon, Netflix.
Intangible Assets are the invisible contributors that create over 80% of the value in companies today. At TechInvest Alberta, we are using the term, Venture Capital 2.0 to describe a new way to capture value in companies and leverage this value into the marketplace.
Think you missed out on Internet 1.0 and did not get the opportunity to really make your mark?
There is some good news. You have a second chance.
On top of that, you can be part of a movement to shift Alberta’s economic landscape towards a more viable and sustainable future.
We are asking Albertans to help us invest in and launch TechInvest Alberta Inc.
An investment in TechInvest will position you as an insider in the exciting world of Venture Capital 2.0 – a dynamic system TechInvest is using to ramp up technology commercialization in the province. Venture Capital 2.0 offers a new investment model for average Albertans, a cluster and platform strategy that, together, is designed to reduce commercial risk and engage investors in opportunities that are otherwise often inaccessible.
Yes, it’s all happening right here at home using Intangible Assets.
Don has a passion for economics and business development. He has worked in a variety of roles in education and economic development. He served as a Director of the Alberta Congress Board for over 20 years and organized annual labour and economic conferences.
Don was appointed by Premier Klein to serve on the Alberta Economic Development Authority – a position he held for 12 years working with senior business people to advise government on building a strong and prosperous province from the mid-1990s until 2007.
Don continues to serve on various boards and committees including the Alberta Council of Technologies (www.abctech.ca). Don is currently the Chair of a committee at ABCtech which is developing a “Tech Credit Union” and, as part of that effort, working with a specialized team to launch and operate TechInvest Alberta Inc. in order to facilitate financing of start-up technology companies in Alberta with an emphasis on developing intangible assets.
Don also has a deep passion in working with Indigenous groups and communities and, for over 20 years, has helped them develop business opportunities with Industry. He is an owner of Verigon Canada Ltd. (www.verigoncanada.com) which builds alliances and partnerships with and on behalf of Indigenous people.
Example of an Intangible Asset
A blog that has a network of two million subscribers can consider such a network as an expense (e.g. hosting costs, staff to manage subscribers, etc.) and be written off against the sales revenue the network generates. However, on the other hand, using existing accounting standards this same network can be considered an Intangible Asset which can be quantified and for which a value could be determined.
The actual cash flow from the sales of services to this network would set a value for this Intangible Asset (the network) and, consequently, contribute to a sizable increase in the valuation of the blog for its owner.
The New Balance Sheet for Companies
It is the accounting standard and its related procedures which allow for an Intangible Asset to be created and put on the balance sheet of companies. This is a very powerful concept, especially if Intangible Assets can be used as collateral to finance a company.
Intangible assets are rapidly becoming an integral component of what is emerging in technology and non-technology companies alike. For years, intangibles have remained invisible, misrepresented and certainly understated in their value. TechInvest Alberta wants to change all that and bring the power of intangible assets to the world of finance in a way that, up until now, has been applied inconsistently and sporadically.
TechInvest has developed a way to develop intangible assets and make these available as collateral to help technology start-up companies finance the commercialization of their new technologies.
TechInvest is focused on taking advantage of the emergence of Internet 2.0 in order to bring high value to bear on intangible assets and their development.
The Intangible Asset Revolution
In order to understand this better, we need to look at the backdrop of what will drive the Intangible Asset Revolution. For example, we can appreciate that Internet 1.0 was based on the exchange of information and, later through the use of personal profiling, was able to bring relevant information and services to specific market segments.
In the span of only two decades, Internet 1.0 was able to generate billions of dollars of annual revenue that ensued with new innovative business models such as those offered by Google (Alphabet), Facebook, Netflix, Alibaba, Twitter, Amazon, Priceline, among many others.
Internet 2.0 is about the exchange of value. It is expected to have a much bigger impact than Internet 1.0 simply because the platforms which are being developed will enable the participation of many more millions of people at the commercial level.
In the new world of Internet 2.0, people from around the world will be able to launch a business easier, faster and with more market opportunities. Most of this will be peer-to-peer without any need for brokers or broker-like functions. In many cases, the businesses will be fully automated (e.g. Smart Contracts) and become autonomous economic service providers earning revenue for their owners.
Blockchain Platforms are Here to Stay
Intangible assets will be presented as digital assets which are tradeable on Internet 2.0 and will be built on blockchain platforms like Ethereum, NEO, Stratis, LISK, EOS and others. These platforms already exist with more on the way in a rapid evolution making the transition to Internet 2.0 much friendlier. Similar to Internet 1.0, we will soon be past the early, awkward days of trying to exchange value with others and be able to enjoy swift on-boarding and easy-to-adopt applications to participate in these systems.
The key to the whole system is that Internet 2.0 will use the feedstock of Intangible Assets to create digital assets which can be transacted readily.
It is helpful to take a moment and touch on cryptocurrencies because they, too, will be a dimension of what will make up the future of Internet 2.0.
The advent of the cryptocurrency craze is a phenomenon of people becoming exuberant on the one hand and, on the other hand, vulnerable to those who sought to take advantage of a misunderstood technology. The bottom line is that cryptocurrencies are digital assets and not actually currencies. The early introduction of cryptocurrencies without properly backing them up with Intangible Assets created a false start similar to what happened with the dot.com bubble in the late 1990s. However, this does not mean that the system for creating and offering cryptocurrencies is not important to how digital assets will be created and exchanged in the future. Most importantly, there is little doubt that Intangible Assets will be necessary to backstop the value inherent in digital assets, especially cryptocurrencies.
The Greatest Opportunity for You and TechInvest
While there is a great deal of information and excitement around blockchain technologies and cryptocurrencies, TechInvest is focused on developing Intangible Assets because that is where there is the greatest opportunity to design and set the standards for their development and application in finance.
Further, once developed, Intangible Assets can become digital assets and become the product supplied for the exchange of value. Digital assets will be in high demand with the growth of Internet 2.0 similar to what content has been to Internet 1.0. By focusing on real cases of Intangible Asset development and documenting the procedures necessary to comply with global and national accounting standards, TechInvest will take its place at the front end of digital asset formation.
TechInvest will be earning revenue from its work on developing Intangible Assets and using this as collateral to help start-ups in Alberta finance the commercialization of their technologies.
By putting the value of a company’s Intangible Assets on their balance sheet and not allowing such assets to be expensed out or amortized unnecessarily, a whole new world of financing options can be made possible for the company.
For example, if a start-up company has expended $3 million to develop a technology and this has been recorded as an investment rather than as set of expenses, it may be possible to put the entire investment towards the development of an asset. Now, instead of having the company have expenses on its balance sheet, it has an asset and, consequently, a higher valuation for the company.
Accounting Firms Join the Revolution
TechInvest would ensure that accounting standards for Intangible Assets are met and that third-party accounting firms can verify the same result. In this way, when investors are looking for security from the company or when a financial institution is seeking collateral, there is an asset ready to serve that purpose.
TechInvest recognizes that there are many different categories and types of Intangible Assets.
The New TechInvest Taxonomy and Protocols
A team of specialists at TechInvest have already begun developing a taxonomy of Intangible Assets.
The company is also starting to develop protocols for Intangible Asset development along with the processes necessary to meet international and national accounting standards and practices.
Interestingly, the protocols that are created will be TechInvest’s own Intangible Assets as they will define market opportunities for developing Intangible Assets across several market sectors. TechInvest’s protocols will enable accounting practitioners to apply TechInvest’s specific methodologies for the benefit of their customers and draw in the inherent value of the Intangible Assets that are originated.
TechInvest is partnering with Alberta Council of Technologies and with River City Credit Union to build a strong platform for financing innovation through Intangible Asset development. Other business relationships are being explored which can help build out a locally-operated and robust financing system for Alberta-based start-ups.
Albertans can benefit directly from the Intangible Asset Revolution. As mentioned at the beginning of this article, TechInvest is encouraging Albertans to learn more about what the company is doing and inviting Albertans to become investors. We would like you to join us in this initiative and be part of an exciting future for yourself and for Alberta as Internet 2.0 becomes the ‘new normal’ and Intangible Asset development comes to the forefront of value creation for companies and individuals alike.
Don’t miss the future – it’s already here.
For more information, please visit our website at: www.techinvestalberta.com