Valuing IP Companies: How to Value Science-Driven and IP-Rich Companies

Valuing science-driven companies is one of the hardest challenges in corporate finance. Whether a business is preclinical, commercialising, scaling, or preparing for a transaction, traditional metrics often fail to capture the true drivers of value: intellectual property, scientific progress, regulatory pathways, and multi-application technology platforms.

At Sherwood, we work with companies across biotech, medtech, digital health, advanced manufacturing, AI, and deep tech to help founders, boards, and investors understand—credibly and defensibly—what the company is worth and why.

This article outlines the high-level concepts behind valuing IP-rich companies. For the complete frameworks, case studies, and modelling methodology, you can download the full guide below.

Why Traditional Valuation Models Don’t Work for Valuing IP Companies

Revenue multiples, EBITDA multiples, and simple DCFs struggle because IP-driven companies often have:

• Long development and regulatory timelines

• High technical or clinical uncertainty

• Multiple potential commercial pathways

• Binary scientific outcomes

• Platform value beyond a single product

Valuation needs to incorporate both risk and optionality, neither of which traditional tools measure well.

The Principles Behind IP Venture Valuations

While every company is different, valuations for science-driven businesses typically need to consider:

1. How risk reduces over time

Value increases as companies reach technical, clinical, commercial, or regulatory milestones.

2. How IP connects to a real market problem

Investors look for evidence of market pull, not just technological possibility.

3. How optionality influences value

Many platforms support multiple indications, products, or verticals. Not modelling optionality can materially understate worth.

4. How validation sharpens valuation

Patents, publications, data, and regulatory engagement help derisk the story and support higher valuation ranges.

These principles are simple in concept but complex in application. That’s why science-driven valuation requires a tailored approach and deep understanding of both domain science and financial modelling.

Who This Matters For

This guide is relevant for companies of any stage, including those:

• Raising capital

• Entering licensing discussions

• Facing shareholder or board transactions

• Preparing for an exit

• Structuring deals with international partners

• Allocating resources across pipelines or platforms

Whether the goal is alignment, negotiation, or regulatory credibility, a defensible valuation helps shape outcomes.

Access the Full Guide: Valuing the Unquantifiable

The full guide goes far deeper, covering:

• Detailed valuation frameworks for IP-rich ventures

• How rNPV works in practice

• How milestones shape valuation

• How to manage platform optionality

• How investors evaluate science-driven companies

• Example structures for capital raises, licensing, and exits

• Case studies across biotech, medtech, diagnostics, and digital health

  
  

Download the full guide: Valuing the Unquantifiable — A Guide to Science-Driven and IP-Rich Company Valuations.