A Study of Small and Medium-Sized Technology-Based Enterprises

in Different Risk Contexts

Zhonglong Yan

Royal Crown School, Scarborough, Toronto, Ontario, Canada, M1S 4G2, Canada

Keywords: Technology-Based SMEs, Market Risk, Financial Risk, Crowdfunding, Intellectual Property, Securitization.

Abstract: In China's persistent economic transformation and accelerated technological advancement, technology-based

small and medium-sized enterprises (SMEs) face an escalating array of multifaceted and interwoven risks.

This study investigates two exemplary cases—equity crowdfunding campaigns of technology companies and

the "Guangzhuanli" intellectual property (IP) securitization initiative—to explore how market and financial

vulnerabilities emerge and intersect. The research focuses on structural challenges SMEs face in adapting to

the digital ecosystem and accessing stable financial resources. The findings indicate that erroneous audience

segmentation and suboptimal outreach methodologies can amplify the susceptibility to demand-side volatility.

Concurrently, conventional financing frameworks, characterized by rigidity, impede access to long-term

financial resources. The case of "Broad Communication Power" underscores the potential of structured

finance instruments to transform intangible intellectual property assets into reliable cash flows, offering an

effective strategy for enhancing liquidity and creditworthiness. The paper emphasizes the interrelationship

between market and financial risk and proposes a comprehensive risk governance approach. The document

further puts forward policy recommendations, including enhancing consumer data comprehension,

establishing a standardized IP asset valuation mechanism, and promoting the utilization of financing

instruments such as IP-backed securities. These insights can assist policymakers and SME leaders in

developing a more profound comprehension of risk resilience strategies, thereby enhancing the financial

sustainability of China's innovation-driven economy.

1 INTRODUCTION

In the context of a shifting economic landscape and

the rapid advancement of digital technologies, small

and medium-sized technology enterprises (SMEs)

confront a unique set of risk challenges that are

particularly salient at their current stage of

development. Significant shifts in market structure

and the continuous evolution of financing channels

have exerted considerable pressure on enterprises

with limited resources, particularly in market

adaptation and capital acquisition. Compared with

large enterprises, small- and medium-sized

enterprises (SMEs) encounter inherent disadvantages

regarding brand influence, user base, capital reserves,

and risk resistance. This phenomenon is particularly

evident in the context of SMEs' entry into digital

platforms or the exploration of novel financing

methods. In such circumstances, they are more likely

to expose management flaws and strategic blind spots.

This paper selects two representative Chinese

technology-based SMEs as case studies. The present

study will examine the intellectual property

securitization financing projects of Fudi L

Technology Company and "Light Patent." The

present study analyzes the market feedback bias and

warm-up failure encountered by Company L in its

exploration of a crowdfunding platform. This analysis

demonstrates SMEs' typical risks regarding digital

market adaptability.

Furthermore, the study implements the "Light

Patent" ABS project, exploring the securitization of

intellectual property to alleviate the financing

pressure experienced by science and technology-

based SMEs. This practical and structural analysis

examines the logic behind the design. Concurrently,

the "Light Patent" ABS project is being implemented,

and the current state of science and technology-based

SMEs is being discussed, along with alleviating

financing pressure through intellectual property

securitization and the principles of structural design.

This section will thoroughly examine these two cases

Yan, Z.

A Study of Small and Medium-Sized Technology-Based Enterprises in Different Risk Contexts.

DOI: 10.5220/0014321100004718

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Engineering Management, Information Technology and Intelligence (EMITI 2025), pages 92-101

ISBN: 978-989-758-792-4

to distill the risk exposure characteristics of SMEs in

terms of economic fluctuations and viable coping

strategies. It will also provide empirical references

and policy suggestions for analogous enterprises.

2 MARKET RISK

2.1 Market Risk Overview

Market or systemic risk is the possibility that a firm

will incur losses due to external market fluctuations

in its daily business operations (Li & Wang, 2020).

This risk is often triggered by macroeconomic

fluctuations, cyclical adjustments within the industry,

changes in consumer demand, policy changes, or

uncertainty in the international environment (Niu,

2023). A wide range, uncontrollability, and rapid

propagation characterize market risk. Its main

manifestations include the obstruction of sales

channels, pricing system imbalance, demand decline,

and drastic changes in the competitive landscape,

especially the impact of new entrants on the

established market structure (Tan, 2025). SMEs

encounter numerous challenges in managing market

risks, particularly concerning capital reserves, brand

influence, and channel resources.

Additionally, they often lack effective buffer

mechanisms and emergency management capabilities

(Berger & Udell, 1998). Furthermore, the system's

capacity for risk identification is deficient. It tends to

lag in data monitoring, which can lead to empirical

decision-making. This, in turn, can amplify the risk

transmission effect. In the intricate and dynamic

market environment, shifts in consumer preferences,

policy directives, and sales channels render SMEs

more susceptible to external shocks, which manifest

in sales contraction, inventory accumulation, or

strategic missteps. Enterprises that depend

excessively on a solitary channel, exhibit inadequate

brand loyalty, and possess deficient emergency

response protocols are predisposed to encounter

difficulties in abrupt policy or market shifts. The

digital environment has further intensified

competition. The paradigm shift from a "goods-

looking-for-people" model to the conventional

"people-looking-for-goods" logic reconfigures the

user acquisition path. It is imperative for SMEs to

swiftly adapt to the consumption mechanism driven

by content recommendation and social interaction.

Otherwise, adequate coverage of target customers

will be challenging to achieve. Conversely, by

proactively shaping the information flow, for instance,

through precision marketing and user data

optimization, they can achieve market breakthroughs

and establish a competitive advantage in the new

industry. This paper utilizes L Technology Company

as a case study to investigate its optimization of

product and marketing pathways by utilizing a

crowdfunding feedback mechanism within a digital

platform environment. The objective of this analysis

is to achieve market adaptation and risk response

under resource constraints, thereby providing

research references for the risk management practices

of SMEs.

2.2 Case Background: L Technology

Company's Business and

Crowdfunding Approach

L Technology, a small and medium-sized technology

enterprise, was founded in June 2014 and is registered

in Qingdao, Shandong Province. The primary focus

of this enterprise is the research and development of

innovative applications of intelligent hardware. In the

nascent stage of its development, the company drew

upon the research and development resources and

production platform of the Haier Group to conduct

preliminary explorations in the domain of smart home

technology. The initial product development focused

on creating portable temperature control devices,

wireless connection modules, and other products. The

services were primarily directed towards large-scale

brand manufacturers, with B-end customization as the

primary operational modality. In its nascent operation

stage, L Technology has primarily concentrated on

developing technological output while concurrently

amassing expertise in product design and the

execution of small-scale production initiatives. 2015

the company initiated its inaugural equity

crowdfunding campaign using an Internet platform.

This strategic initiative diversified its financial

avenues and facilitated the exploration of its brand

within the consumer market. As the company has

gradually transitioned from its original focus on OEM

(Original Equipment Manufacturer) services to an

emphasis on independent brand development, it has

formulated a strategic direction emphasizing both

hardware capabilities and the development of

consumer brands. In 2017, the company completed

the listing on the "New Third Board," a move

intended to promote the standardization and long-

term growth of the organization with the help of the

capital market. Standardization and long-term growth.

By 2020, the company's team size is expected to

range from 30 to 50 individuals, with a significant

proportion of the staff comprising technical positions.

This team will possess a streamlined structure,

A Study of Small and Medium-Sized Technology-Based Enterprises in Different Risk Contexts

flexible project response capabilities, and the capacity

to test and adjust products rapidly. While undergoing

a brand transformation, the company's management

acknowledges that direct entry into the traditional

consumer market presents considerable challenges,

including significant marketing expenses, the

complexity of expanding channels, and delayed user

feedback. This is particularly salient in contexts

characterized by a dearth of a consumer base and

terminal resources. Consequently, ascertaining the

market value of the product with precision has

become a pivotal challenge. Consequently,

enterprises are increasingly leveraging crowdfunding

platforms as a strategic breakthrough to achieve

multifarious objectives, including initial exposure,

market testing, and cash flow balance.

In contrast to the prevalent "promotion-oriented"

crowdfunding models, L-Tech's approach is

characterized by a strategic element. We can ascertain

the rationality of product design and functional

orientation through meticulous observation of user

behaviour, including their propensity to pay,

interactive tendencies, and content evaluation. The

team regards this "market inversion-user

participation" approach as a key risk control link,

which helps to screen the product value and optimize

the decision-making process under the circumstances

of controllable upfront investment. On May 18, 2015,

L-Tech launched its first branded product project on

the Jingdong Crowdfunding Platform, "M-911" smart

thermostat, marking its first public digitalization

attempt for the C-end market. The project's 40-day

cycle was designed with a multi-stage support

mechanism, encompassing giveaways, fan status, and

cooperative agents. This approach ultimately

garnered the support of more than 28,000 users.

Following the project's successful completion, the

company recovered the initial capital investment and

obtained substantial real data regarding the target

users' preferences, functional requirements, and

marketing communication pathways through the

platform's feedback mechanism. The crowdfunding

experience also prompted the company to transform

its internal product process from an engineering-

oriented development mechanism to an iterative

system emphasizing user input and data feedback.

Since then, L Technology has adopted "platform

verification" as a mandatory step before product

launch, and has progressively established a data-

centred and user-oriented product-market interface

path, laying a methodological foundation for

subsequent product launches and independent

operations (Lu, 2023).

2.3 Risk Exposure Process: Market

Feedback Deviates from

Expectation

During the initial stage of the project launch,

Company L primarily utilized WeChat to disseminate

information. This communication platform was

employed for promotional and informational

purposes, including disseminating updates,

announcements, and relevant content. In addition to

WeChat, Company L also employed its official

website and select WeChat groups as channels for

sharing information. This communication method is

characterized by its relative closure, which is

evidenced by its limitation to existing customers and

technical circles. This limitation results in a lack of

external diffusion ability, thereby hindering the reach

of crowdfunding information to a broader range of

potential consumer groups. Simultaneously, the

publicity content places excessive emphasis on

product technical parameters. The current publicity

content disregards the user's interest in driving, the

absence of specific application scenarios, and its

failure to be structured around the user's real needs.

Consequently, the content is challenging to inspire

resonance or to prompt purchase behaviour, and it is

not easy to stimulate interest in purchasing. A more

critical issue is the concentration of publicity release

times in the noon or afternoon of weekdays. This

timing does not consider the media use habits of the

target group, and it misses the evening peak hours

(e.g., 8:00 p.m. to 10:00 p.m.). As a result, it is not

easy to form a centralized exposure of the publicity

content, even if it is released. Due to numerous factors,

the project encountered the following predicament at

the project's nascent stage: insufficient exposure,

limited clicks, and low conversion.

For instance, during the initial week of the

promotional campaign, the project garnered fewer

than 500 clicks, exhibiting a conversion rate of less

than 1%. This figure contrasts with the industry

standard conversion rate, which ranges from 3% to

5%. Concurrently, the company has deviated from the

positioning of users, and its communication strategy

primarily focuses on platform fan images such as

"technology enthusiasts" and "young engineers."

However, this strategy neglects the realistic

requirements of crowdfunding projects regarding

users' willingness to buy and ability to pay. While this

population segment may indeed be interested in

developing new products, converting this interest into

tangible support is impossible. The company's

strategic decisions, which included significant

investments in communities promoting technical

EMITI 2025 - International Conference on Engineering Management, Information Technology and Intelligence

exchanges, such as Zhihu, V2EX, and Jianshu, while

neglecting to establish a closed-loop communication

system on platforms with a consumer-oriented

atmosphere, including Jittery, Xiaohongshu, and B

Station, have led to a conspicuous mismatch between

the subjects of "hot topics and cold orders" and "high

interaction and low conversion." The structural

incongruity between the prevalence of a particular

topic and the relative infrequency of related orders.

For instance, although Zhihu has garnered more

discussions and favourable ratings, these interactions

have not been translated into tangible support for its

projects. This outcome indicates that its content

marketing strategy has not yet established a cohesive

closed-loop system. During the initial three days

following the project's initiation, the platform's

recommendation mechanism was employed to

generate limited exposure. However, there was a

conspicuous absence of recognition and trust between

users and the product. Despite the substantial number

of views, there was minimal support. In practice,

despite the platform's extensive exposure, the growth

of its supporters was gradual, and the conversion rate

was notably low. This suggests that users were not

sufficiently motivated to participate. Consequently,

as the weight of the platform's recommendation

diminished, the project was expeditiously substituted

by alternative products, resulting in a precipitous

decline in demand. A review of the project's

execution reveals several notable shortcomings on the

company's part. First, a timely FAQ area was not

established, and a user community was not cultivated.

Additionally, a mechanism for progress updates

and communication was lacking. It is also important

to note that user feedback was not addressed, which

further eroded the confidence of potential supporters.

Concurrently, the company did not have prior

performance records or case support, and it failed to

establish a reliable supply-side image on the platform.

Consequently, a significant number of watchers

ultimately chose to withdraw. According to the

estimated conversion model, the project was

scheduled to achieve at least 40% fundraising

progress within two weeks. However, it only reached

approximately 10%, failing to meet the platform's

basic recommendation criteria and resulting in sunk

publicity costs. On the 16th day of the project, the

company made the strategic decision to transition

offline and announced the cessation of crowdfunding,

redirecting the product toward a B-end customization

trajectory. Concurrently, the marketing team

underwent structural adjustments, signifying the

termination of the market-based financing approach

(Lu, 2023).

2.4 Risk Impact Assessment: The

Chain Reaction of Crowdfunding

The failure of Company L's crowdfunding initiative

instigated a sequence of cascading events. Initially,

the brand's credibility suffered a setback, and certain

supporters voiced their discontent on social media

platforms. Some even discontinued their patronage,

which deleteriously affected the company's

reputation. Secondly, the company was compelled to

modify its budget structure internally to address the

discrepancy in market expectations. This entailed

reallocating a portion of the funds initially allocated

for online promotion back to offline channels and

discontinuing the original digital marketing program.

Thirdly, employee sentiment was profoundly

impacted, with the core product team expressing

reservations regarding the project's viability, certain

members indicating an inclination to resign, and a

decline in team morale. Finally, the failure revealed

the incongruity between the users of the digital

platform and the actual consumer population.

Consequently, the company's confidence in the

digital market diminished, suspending the originally

planned platform expansion and new product

crowdfunding program. The overall pace of the

transition was significantly slowed down (Lu, 2023).

2.5 Case Summary and Lessons

Learned

This case exemplifies the evident deficiencies of

Company L in terms of market discernment and risk

management. The core error committed by the

company was its inability to differentiate between

technical fans on digital platforms and consumers

who genuinely intended to purchase the product. This

failure resulted in a lack of data support for strategy

development and significant judgmental bias. This

experience underscores the significance of

conducting thorough user research and path

simulation before SMEs enter a new market, instead

of merely applying industry experience.

Simultaneously, it is imperative to acknowledge that

the efficacy of a channel selection is not contingent

upon its novelty; rather, its appropriateness is

paramount. That is to say, the selection should align

with the target user's behaviour and consumption

patterns, ensuring optimal effectiveness. Project

experience prompts enterprises to exercise caution in

making key decisions without empirical data,

particularly regarding fundamental issues such as

product pricing, platform placement, and target user

A Study of Small and Medium-Sized Technology-Based Enterprises in Different Risk Contexts

positioning. These decisions must be data-driven and

market-oriented (Lu, 2023).

3 FINANCIAL RISKS

3.1 Overview of Financial Risk

Financial risk is the potential for business interruption

or financial crisis, precipitated by inadequate liquidity,

diminishing solvency, and a deteriorating credit

rating. This can result from an imbalance between

fund supply and demand, an irrational financing

structure, or external financial fluctuations (Hu &

Zhang, 2018). The financial risks confronted by

science and technology-based SMEs in the growth

process are characterized by structural, systemic, and

high-frequency episodes, which are manifested in

capital rupture, debt default, and capital structure

imbalance. High-tech enterprises depend heavily on

technology research and development, significantly

impacting their asset composition. These enterprises

typically possess primarily intangible assets, a

singular source of revenue, a protracted liquidity

cycle, and generally unstable cash flow. Carpenter

and Petersen have noted that high-tech enterprises

frequently encounter constraints in their financing

due to the absence of collateral and the paucity of

mature financial models. These enterprises are

compelled to maintain ongoing investment before the

realization of returns, and they are susceptible to

disruptions in their capital chain when external

market fluctuations occur. Furthermore, the

aforementioned enterprises generally face challenges

in accessing conventional financing mechanisms.

Consequently, they predominantly resort to short-

term financing options or high-interest credit options.

The repayment of debt is predominantly contingent

upon projected earnings, and their financial solvency

is susceptible to project delays or a sluggish market

(Carpenter & Petersen, 2002). Berger and Udell posit

that the dearth of effective information disclosure

mechanisms and the inadequacy of credit ratings

engender financing conditions often inequitable for

science and technology-based SMEs, heightening the

risk of default due to elevated leverage (Berger &

Udell, 1998). Udell further posits that high-

technology SMEs frequently encounter inequitable

financing conditions due to inadequate information

disclosure mechanisms and the weakness of credit

rating bases. Sogorb-Mira further noted that the

proportion of their short-term liabilities is excessive,

their capital is inadequate, and the pressure of fund

scheduling increases considerably. Of particular

concern is the interconnected nature of these three

types of financial risks, which have been

demonstrated to be highly interrelated. The

occurrence of capital breaks has been shown to

weaken debt-servicing capacity, which can

subsequently lead to defaults. This, in turn, has

resulted in the erosion of confidence in external

financing, the exacerbation of capital structure

imbalances, and the eventual induction of systemic

risks (Sogorb, 2005). Bottazzi et al. demonstrate that

when innovative firms encounter a financial

imbalance, they often experience protracted recovery

periods and intricate pathways rife with risk. These

firms are highly vulnerable to the "financing crunch-

debt service default-credit imbalance phenomenon."

Moreover, enterprises operating within the scientific

and technological sector are confronted with a myriad

of challenges, including but not limited to: high-

intensity investment and capital deposition,

protracted research and development (R&D) cycles,

and the uncertainty surrounding the translation of

research outcomes into practical applications. These

challenges often result in a significant long-term

occupation of capital (Bottazzi & Tamagni, 2008).

Despite the utilization of patented technology, the

absence of mature financial records and an evaluation

system poses significant challenges in obtaining

support from traditional financial institutions.

Structural deficiencies in the financing channels have

been identified as a significant challenge. Bank credit

preference for tangible assets, stable cash flow, and

science and technology-based enterprises is mostly

for light assets. Financial indicators fluctuate, making

it difficult to meet their risk appetite. The capital

market requires high information disclosure and

standardization; most unlisted enterprises cannot

meet these standards, and financing options are

limited. Without multi-layer capital support, the

available means of financing are constrained to

internal accumulation, debt financing, or policy funds,

an inefficient and costly strategy. Existing guarantee

and risk compensation mechanisms are inadequate in

addressing the unique characteristics of these risks,

and financial products often lack suitability, resulting

in a significant mismatch in the allocation of

financing resources. In the face of traditional

financing problems, some enterprises have attempted

to introduce structured tools, such as asset

securitization. A notable example is the Guangzhou

"Guang Patent" ABS project, China's inaugural

securitization product derived from patent licensing

revenue rights. This project has paved the way for the

"assetization-securitization-financing" of intangible

assets, a process facilitated by incorporating SPV,

EMITI 2025 - International Conference on Engineering Management, Information Technology and Intelligence

implementing credit enhancement mechanisms, and

involving state-owned enterprises. The introduction

of SPV, credit enhancement, and the participation of

state-owned enterprises has enabled the realization of

the "assetization-securitization-financing" of

intangible assets. This has effectively alleviated the

financing difficulties experienced by science and

technology-based SMEs and demonstrated the real

value of intellectual property securitization in science

and technology finance (Wei, 2021).

3.2 Introduction to the Case

Background: Overview of the

"Guangdong Patent" ABS

Financing Project

The "Guangzhou Patent" ABS project represents a

pioneering development in China's financial

landscape, as it is the country's first intellectual

property securitization product. This innovative

financial instrument utilizes patent license revenue

rights as the sole underlying asset, a move that is

spearheaded by the Guangzhou Development District

(GDD). The project, formally referred to as the

"Société Générale-Guangzhou Development Zone

Patent License Asset Support Special Program,"

involves the utilization of assets from multiple

science and technology enterprises within the

jurisdiction. These enterprises have consolidated their

patent license rights and transferred their revenue

rights to establish a stable cash flow. This cash flow

serves as a foundation for the issuance of securities

products. The asset pool employs a multi-subject

integration model, comprising patent license

agreements from disparate enterprises, with robust

risk diversification and cash flow anticipation. A

Special Purpose Vehicle (SPV) was incorporated into

the project structure to facilitate the independent

patent and revenue rights operation through dual

licensing arrangements. A multi-layered credit

enhancement mechanism was implemented,

encompassing features such as a senior/subordinated

structure, excess cash coverage, and differential

payment commitments. This mechanism was

introduced to safeguard the credit rating and

issuability of the securities.

The project was finalized, established, and

successfully issued at the Shenzhen Stock Exchange

in September 2019, with a total value of RMB 301

million. The issuance signifies a pivotal moment in

China's intellectual property securitization journey, as

it marks the completion of a closed loop in practice.

This development provides a technical framework

that enables intangible assets to participate in the

capital market. The project under consideration

constitutes the inaugural instance of IPR ABS, and it

is characterized by its elevated level of

standardization and innovation concerning the

following aspects: product structure design, asset

screening logic, cash flow construction, and risk

control arrangements. A distinguishing feature of this

initiative is its integration of a balanced approach to

policy orientation and market mechanism, along with

a recognition of the commercial replicability of

financial products. The successful initiation of the

project is not only of pilot significance, but also

establishes the technical and institutional foundation

for constructing an intellectual property capitalization

system. The project's overarching objective is to

address the systemic exclusion problem of science

and technology-based SMEs within the conventional

financing system. Given that such enterprises

primarily operate with limited assets, it is challenging

to capitalize on core resources, such as patents and

technologies, through conventional credit channels.

Consequently, their financing options have been

constrained for an extended period. The project's

approach to recognizing future patent licensing

revenue as cash flow assets is characterized by its

standardization and structuring, facilitating the

establishment of stable financing channels that do not

necessitate physical collateral. Concurrently,

establishing a local, state-owned platform for credit

enhancement has enhanced financial institutions' and

investors' acceptance and risk tolerance. This, in turn,

has led to a systematic opening up of the conduit

between scientific and technological achievements

and the capital market.

Regarding the project's financing effectiveness, it

has achieved two primary objectives. First, it has

facilitated the rapid availability of funds while

effectively managing financing costs. This has led to

a notable alleviation of the pressure associated with

cash flow tension during enterprise expansion.

Second, the project has demonstrated intellectual

property securitization's genuine value and

operational feasibility in serving the real economy

(Berge & Udell, 1998).

3.3 Financial Risk Manifestation:

Traditional Financing Methods Are

Difficult to Meet Development

Needs

The financial risks faced by science and technology-

based SMEs in the process of financing are not

isolated and occasional occurrences; instead, they are

a concentrated manifestation of the severe mismatch

A Study of Small and Medium-Sized Technology-Based Enterprises in Different Risk Contexts

between their enterprise characteristics, such as light

assets, unstable cash flow, and difficulties in credit

assessment, and the existing credit logic. Enterprises

generally lack collateralized physical assets,

complicating the procurement of adequate financing

from banking institutions that utilize collateral as the

primary risk management instrument. In the context

of information asymmetry, financial institutions

exhibit reluctance to extend credit, even at elevated

interest rates, as this practice may attract high-risk

borrowers, thereby elevating the likelihood of default.

This theory is particularly well-suited to the financing

challenges faced by science and technology-based

enterprises. These enterprises often encounter

difficulties quantifying credit risk due to the absence

of stable historical data and standardized assets.

Consequently, they are systematically excluded from

mainstream financing channels (Stiglitz & Weiss,

1981). Secondly, the corporate credit rating system is

disadvantageous to SMEs. Demirgüç-Kunt et al.

demonstrate in their study of the global credit system

that the absence of a reliable credit history and a

mechanism for information disclosure frequently

constitutes the underlying cause of the general

challenge and elevated cost of financing for SMEs. In

such cases, even if financial institutions are inclined

to extend credit, they frequently impose exorbitant

interest rates or stringent guarantee requirements,

thereby exacerbating the financial strain experienced

by enterprises (Demirgüç-Kunt, Beck, & Honohan,

2006). Concurrently, the enterprise's cash flow

structure exhibits an absence of elasticity.

Science and technology-based SMEs in the R&D

investment stage encounter a prolonged period of

non-return, and their market transformation is

contingent on the technological sophistication and

market acceptance of the associated uncertainty.

Consequently, their overall solvency is profoundly

influenced by external financial support. Inadequate

financing can potentially culminate in the dissolution

of the capital chain. Beck and Demirgüç-Kunt further

noted that, despite most banks recognizing the

profitability potential inherent in SMEs, the absence

of policy protection or guarantees hinders financial

support for SMEs. Beck and Demirgüç-Kunt further

noted that while most banks recognize the

profitability potential of SMEs, in the absence of

policy protection or market stability, banks are more

inclined to serve low-risk large enterprises, thus

creating a "financing discrimination" in the system

(Beck & Demirgüç-Kunt, 2006).

Furthermore, the short-term characteristics of the

financing structure have been identified as a

significant contributing factor to the concentration of

financial risk. Empirical research conducted by

Cabral and Mata indicates that SMEs frequently

depend on short-term loans to sustain operations in

the initial stages of their development. However,

accessing low-cost, long-term capital support that

aligns with their long-term development needs is

challenging. This financing structure exhibits a

deficiency in its capacity to mitigate the impact of

fluctuations in cash flow, thereby amplifying risk

concentration (Cabral & Mata, 2003). The financial

risk posed by science and technology-based SMEs

does not stem from a single variable; rather, it is the

consequence of a discrepancy between corporate

attributes and financial logic. The resolution of this

issue necessitates a multifaceted approach,

precluding reliance on adjustments to credit rates or

policy subsidies in isolation. A comprehensive

strategy is imperative, encompassing the promotion

of financial information infrastructure at the

institutional level, the enhancement of the enterprise

credit data system, and the strategic allocation of

funds to high-potential innovative enterprises. This

comprehensive approach is instrumental in achieving

a dual optimization: enhancing the efficiency of

financial resource allocation and fostering enterprise

growth.

3.4 Project Design Features:

Optimizing Financial Structure

Through Securitization

It is reasonable and feasible for this project to select

patent royalty income as the underlying asset for

securitization. From an asset perspective, this

particular income right has been derived from mature

patent licensing transactions, characterized by a

foundation of rights and a predictable future cash

flow. This fulfills the fundamental criteria for

securitization, specifically the "stable and predictable

income" aspect (Wei, 2021). Concurrently, patent

license income rights diverge from conventional

enterprise assets regarding their independence from

substantial asset backing. This attribute aligns with

the evolving nature of science and technology-based

SMEs, which are characterized by their asset-light

structure and pronounced knowledge-intensiveness.

Through the structured transformation of such

intangible assets, the project realizes the path

innovation of "generating debt by right - generating

gold by debt," which opens up a capital market

financing channel for SMEs lacking physical

collateral (Odasso & Ughetto, 2011). The "dual

licensing model" is employed in the project design to

construct the asset cash flow path.

EMITI 2025 - International Conference on Engineering Management, Information Technology and Intelligence

In the initial step, the original patent proprietor

will authorize the patent's exclusive implementation

right to the project sponsor (or the SPV established by

it), which will pay a one-time hefty licensing fee as

the underlying cash flow of the underlying debt assets.

In the subsequent step, the sponsor will reverse-

authorize the same patent to the original proprietor. In

the subsequent step, the initiator will reverse-license

the aforementioned patent back to the original owner.

The original patent owner will then be responsible for

paying the usage fee regularly, thereby establishing a

long-term cash flow back arrangement (Wei, 2021).

The primary benefit of this model is that it facilitates

the prompt determination of the patent's market value,

enabling the immediate generation of revenue

through the initial authorization. This enhances the

efficiency of asset realization. Conversely, the

reverse authorization ensures that the enterprise

maintains its control over the technology,

safeguarding the path for commercializing the

patented technology and ensuring revenue generation.

For business entities, such arrangements

effectively front-load the time point of patent revenue

realization, alleviate liquidity constraints, optimize

the short-term asset and liability structure, and

enhance their financial sustainability (Keynes, 1936).

Regarding the credit enhancement mechanism, the

project introduces state-owned enterprises as the

guarantor, thereby providing full joint and several

liability guarantees for the principal and interest

repayment of the securities products. SOEs possess

stable financial status, policy credit endorsement, and

favourable rating records, enabling the securities

product to transition from BBB of the underlying

assets to AA or higher within the credit rating system

(Wei, 2021). This credit enhancement effectively

reduces the market's pricing requirements for the

product's credit risk, thereby compressing the

issuance rate and substantially reducing the financing

cost. For instance, the guarantee mechanism has been

demonstrated to reduce financing rates by

approximately 150-200 basis points in analogous

projects (Campbell & Taksler, 2003). This

development has the effect of enhancing the

efficiency of financing and the market's propensity to

subscribe.

Regarding asset pool construction, the project

follows the principle of "decentralization, equal

quality, and heterogeneous origin." The project

screens and allocates underlying assets from multiple

dimensions, such as industry, geography, and

technology. Specifically, the strategy prioritizes

patent revenue rights that exhibit high technological

maturity, a favourable licensing history, and stable

industry demand. Additionally, it establishes an upper

limit on the proportion of patent licenses granted to a

single industry or enterprise, with a maximum limit

of 20%, to mitigate the concentration of assets (Wei,

2021). The initiative encompasses regional projects in

the eastern, central, and western regions, intending to

enhance geographical dispersion. This combination

helps to control the risk of "individual defaults"

locally, which is not easy to trigger a systemic chain

reaction, and at the same time improves the overall

risk-resistant ability of the asset pool and the stability

of the payment ability of the securities products

(Schwarcz, 1994).

3.5 Financing Effect Analysis: Actual

Results in Alleviating Financial

Risks

Following the implementation of the project, a

favourable financing effect has been reflected in

various financial indicators and market feedback. On

the one hand, the securitization of intellectual

property effectively broadens the financing channels

of enterprises, surpasses the high requirements for

physical collateral and credit rating in traditional

financing, and significantly improves the availability

and flexibility of financing. At the same time, the

issuance of asset-backed securities introduces a new

source of external funding for enterprises, with a

broader coverage of the scale of funding and a more

reasonable term structure. As demonstrated by the

available data, the cost of project financing is lower

than the bank loan interest rate of approximately 150

to 200 basis points during the same period. This result

is significantly better than the traditional credit model.

Furthermore, the stable cash flow is based on

alleviating the short-term debt service pressure of the

enterprise (Wei, 2021). Conversely, the consistent

and reliable capital infusion has been demonstrated to

enhance enterprise liquidity and bolster financial

soundness. The credit rating of the original equity

holders also improved after the project

implementation, reflecting the positive repair effect

of the securitization structure on the credit image of

the enterprise. Moreover, the successful issuance of

the project in the capital market also laid the

foundation for the company to expand its direct

financing and attract the attention of long-term

investors in the future, further enhancing its visibility

and bargaining power in the capital market. The

project has engendered several beneficial feedback

loops, including financing efficiency, credit

reshaping, and risk mitigation. Collectively, these

A Study of Small and Medium-Sized Technology-Based Enterprises in Different Risk Contexts

outcomes establish a replicable model of capital tool

innovation for technology-based SMEs.

3.6 Summary: Intellectual Property

Securitization is an Important Tool

for Financial Risk Management

The "Broad Patent" ABS case exemplifies the

practical application of structured finance design in

addressing the financing constraints experienced by

SMEs. The project offers a financing channel for

science and technology-based enterprises

characterized by its operability, efficiency, and cost-

effectiveness. This channel is made possible by

integrating and packaging patent licensing rights,

supplemented by a dual-licensing structure, a credit

enhancement mechanism, and a decentralized design

of asset pools. This model facilitates the

transformation of intangible assets into predictable

cash flows, thereby enabling the realization of their

value within the capital market. Consequently, it

mitigates the reliance on collateral and credit rating

under traditional financing methods (Wei, 2021). As

demonstrated by this case, the securitization of

intellectual property rights can have several

consequences, including enhancing an enterprise's

creditworthiness, optimizing its capital structure, and

diversifying financial risks. The successful promotion

of financial engineering is contingent upon more than

just the system design itself. In addition, it is

imperative to consider the role of supporting policies,

the legal environment, and market mechanisms. It has

been posited that the securitization of intellectual

property assets can enhance the diversity of financing

channels and improve the pricing ability and anti-risk

elasticity of enterprises in the capital market (Odasso

& Ughetto, 2011). In order to achieve a broader range

of applications in the future, it is necessary to improve

further the intellectual property rights system,

evaluation standards, and issuance support

mechanism. Furthermore, this type of innovative

financing path must be institutionalized and

normalized.

4 CONCLUSION

In the context of profound economic restructuring and

accelerated technological advancement, the external

environment confronting SMEs in science and

technology has become increasingly intricate, with a

risk structure characterized by multiple intertwined

and rapid transmission pathways. This paper

systematically analyzes the risk exposure paths and

structural contradictions of small and medium-sized

science and technology enterprises in the market

adaptation and financing system. The analysis is

based on two typical cases: "L Technology

Company" and "Guang Patent ABS." The study

indicates that market risk and financial risk are the

primary factors impeding the sustainable

development of SMEs. Although independent, the

two types of risks frequently cause and effect each

other and interact with each other in enterprise

practice. At the level of market risk, deviations in the

enterprise's user positioning, communication

channels, marketing strategy, and other elements

under the digital platform will directly trigger a chain

reaction of "cognitive mismatch—traffic

imbalance—conversion obstruction." This, in turn,

will significantly impact the enterprise's brand

credibility and business continuity. The failure of L-

Tech's crowdfunding case illuminates systemic

challenges SMEs face in emerging market

environments. These challenges include biased

strategic judgment, inadequate databases, and a

paucity of content closure. The study revealed that,

from a financial risk perspective, SMEs in the science

and technology sector encounter significant

challenges in aligning with the risk management

principles of traditional financial systems due to the

inherent characteristics of their assets, which are

characterized by their low asset quality, long lifecycle,

and limited creditworthiness. These challenges result

in systematic impediments within the financing

structure, debt repayment mechanisms, and capital

liquidity. The "Broad Patent" ABS project

exemplifies the efficacy of intellectual property

securitization in optimizing financial structures,

upgrading credit ratings, and alleviating capital

pressure from the perspective of structural innovation.

This initiative establishes a replicable best practice

model for SMEs to overcome financing constraints.

The comprehensive research findings indicate that the

risk faced by SMEs in the science and technology

sector is not a transient crisis precipitated by a solitary

variable. Instead, it is the consequence of a protracted

accumulation of structural conditions. Consequently,

enterprises seeking to enhance their risk management

capabilities must fortify internal mechanisms such as

data modelling, user insight, and asset allocation and

consider the congruence between external

institutional conditions and these efforts. It is

imperative to recognize the necessity of a flexible and

responsive financial support framework for SMEs,

particularly in light of their challenges. In addition,

implementing a policy protection mechanism is

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crucial to ensure their stability and resilience in the

face of economic uncertainties. In the future,

developing a multi-level capital market and an

inclusive financial system will be a primary strategy

for addressing their structural challenges.

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