479.   The United States of America extends our thanks to the Friends of IP and Innovation and to Switzerland for the discussion paper on IP financing and start-ups. I would also like to thank everyone who came to the side event yesterday. We had some excellent panel speakers who provided different perspectives on IP and financing. It was fascinating to hear from a start-up who could provide a first-hand account from small business perspective. Thanks to everyone for your great questions during that event. 480.   New businesses in the United States rely on external debt (including trade credit and bank loans) for more than 60% of their initial funding. The leading sources of start-up equity investment are self-financing, friends and family, angel investors, and venture capital.²³ 481.   While venture capital is the dominant source of start-up investment, only about one third of venture capital investment goes to seed and early-stage ventures. In addition to federal programs, state governments also provide significant support to start-ups, with state-level funds that can exceed USD 1 billion supporting a variety of grants, loans, and other forms of financing. 482.   There is very limited data on the use of IP financing and a lack of research in this area. However, venture capital is the largest source of start-up financing and is highly responsive to startups' patent holdings. Surveys of high-technology entrepreneurs suggest that less than 40% of start-ups hold any patents, but over 80% of venture-backed firms hold at least one patent.²⁴ 483.   IP valuation is a service provided by accounting firms and other smaller boutique firms in the private sector. They pitch these services to both IP holders (including start-ups) and to potential investors. They also pitch these services to entities involved in litigation surrounding IP. Education of start-ups and investors and banks about IP financing opportunities takes a variety of forms in the United States of America. There are many varieties of decentralized programs organized and run by educational institutions, technology transfer organizations and associations, the US Federal Government, and private sector firms. The USPTO's hub for start-up resources can help address the IP challenges specific to start-ups, including securing funding.²⁵ 484.   In addition, the US Small Business Administration (SBA) works with innovative small businesses and start-ups to empower them to succeed with access to capital, valuable resources, business knowhow, and the right expertise for each stage of their business lifecycle. As part of its counselling resources, SBA educates small businesses on the importance of and steps to take to protect their intellectual property both in the United States and globally. SBA also works to support small businesses through a variety of access to capital programs. Small businesses can explore microloans and bank financing, such as loans backed by the US Small Business Administration.²⁶ In addition, it provides education on other funding for small businesses including venture capital and crowdfunding. 485.   Recognizing that we can always do better to support our innovative small businesses and startups, the Small Business Administration recently created two new advisory committees – the Invention, Innovation, and Entrepreneurship Advisory Committee (IIEAC) and the Investment Capital Advisory Committee (ICAC) – to accelerate support for start-ups driving critical innovation across the US and increase small businesses' access to capital.²⁷ 486.   A challenge is to expand participation in IP, particularly among start-ups. IP holdings provide benefits such as adding credibility to start-up business plans that facilitate access to financing; however, a relatively small fraction of start-ups hold IP, particularly patents. Another challenge is to monetize IP once obtained. Beyond the classic model in which a start-up becomes a fully integrated firm that invents, develops, and sells products and services, other avenues to obtain financing from IP such as selling or licensing the IP are understudied and underdeveloped. 487.   Increasing knowledge and awareness about start-ups and financing opportunities could be helpful, as could further research into the needs of start-ups when it comes to IP financing and awareness. Becoming familiar with its own IP assets may be a critical step for start-up seeking to use IP-backed finance.²⁸ To that end, one resource is a joint tool called The IP Awareness Assessment, developed under the joint efforts of United States Patent and Trademark Office (USPTO) and National Institute of Standards and Technology which provides the user an assessment of IP awareness, which may be a starting point for an individual or business trying to assess its IP assets. The USPTO also notes on its website the comprehensive information provided by WIPO on IP valuation and IP-backed financing.