Financing innovation troubles - and the need for intangibles as collateral

It appears that many tech companies have gotten themselves into a bind. As the New York Times (Convertible Debt Is Hanging Heavy) reports:

Technology companies have issued gobs of convertible debt to raise financing in recent years. These securities, loans that convert to equity, are starting to come due, putting the companies in a bind. Investors who own them probably won’t want to convert them into shares, so the companies will probably have to pay the debt off or refinance it. But the former would drain precious cash, while the latter is absurdly expensive.

For years, the match seemed perfect. Companies ranging from Micron, the memory giant, to Anadigics, a niche chip maker, needed cash upfront to develop products. Because they had few assets to offer as collateral, conventional debt was often too expensive. But tech companies could promise future profit, and their stocks are typically volatile. Those factors make stock options valuable. Convertibles are essentially bonds with these options attached, so the companies could issue them with low interest rates. (emphasis added)

What do you mean "they has few assets to offer as collateral"? It is not that they have few assets. They are asset rich, in terms of intangibles. But those assets are hard to use as collateral.

Let me stress this point -- tech companies financed themselves based on the promise of future growth because they could not raise funds based on their intangible assets.

A perfect example of why we need a financial system that will utilize intangibles as collateral.