|Haeussler, Carolin; Harhoff, Dietmar; Mueller, Elisabeth (20. Januar 2009): To Be Financed or Not … - The Role of Patents for Venture Capital Financing. Münchener Wirtschaftswissenschaftliche Beiträge (BWL) 2009-2|
This paper investigates how patent applications and grants held by new ventures improve their ability to attract venture capital (VC) financing. We argue that investors are faced with considerable uncer-tainty and therefore rely on patents as signals when trying to assess the prospects of potential portfolio companies. For a sample of VC-seeking German and British biotechnology companies we have identified all patents filed at the European Patent Office (EPO). Applying hazard rate analysis, we find that in the presence of patent applications, VC financing occurs earlier. Our results also show that VCs pay attention to patent quality, financing those ventures faster which later turn out to have high-quality patents. Patent oppositions increase the likelihood of receiving VC, but ultimate grant decisions do not spur VC financing, presumably because they are anticipated. Our empirical results and interviews with VCs suggest that the process of patenting generates signals which help to overcome the liabilities of newness faced by new ventures.
|Dokumententyp:||Paper (Discussion Paper)|
|Keywords:||patents, venture capital, intellectual property rights, R&D, biotechnology|
Betriebswirtschaft > Diskussionsbeiträge
Betriebswirtschaft > Diskussionsbeiträge > Innovation Research
|Themengebiete:||300 Sozialwissenschaften > 330 Wirtschaft|
|JEL Classification:||O30, O34, L20, L26, G24|
|Veröffentlicht am:||26. Jan. 2009 09:51|
|Letzte Änderungen:||29. Apr. 2016 09:04|
Amit, R., L., Glosten, E. Muller. 1990. Entrepreneurial ability, venture investments, and risk sharing. Management Science 36 1232-1245. Anand, B.N., M.J. Piskorski 2000. Resources, Power and Prestige: Formulation of Structural Inequality in Social Exchange Networks. Harvard Business School Working paper. Arora, A., M. Ceccagnoli, W.M. Cohen. 2007. R&D and the patent premium. International Journal of Industrial Organization 26 1153-1179. Baum, J.A.., B.S. Silverman. 2004. Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology start-ups. Journal of Business Venturing 19 411-436 Borenstein, S., Farrell, J., Jaffe, A.B. 1998. Inside the pin-factory: Empirical studies augmented by manager interviews. The Journal of Industrial Economics 46 (2) 123-124. Burton, M.D., J. Sorensen, C. Beckman. 2002. Coming from good stock: Career histories and new venture formation. Research in the Sociology of Organizations 19 229-262. BVCA. 2007. Report on Investment Activity 2006. British Private Equity and Venture Capital Association. London. UK. BVK. 2007. BVK Statistik. Das Jahr 2006 in Zahlen. German Private Equity and Venture Capital Association. Berlin. Germany. several issues. Cockburn, I., M. MacGarvie. 2007. Patents, Thickets and the Financing of Early-Stage Firms: Evidence from the Software Industry, NBER Discussion Paper. No. 13644. Cockburn, I., S. Wagner. 2007. Patents and the Survival of Internet-related IPOs, NBER Discussion Paper No. 13146. Cohen, W.M., R.R. Nelson, J.P.Walsh. 2000. Protecting their intellectual assets: appropriability conditions and why U.S. manufacturing firms patent (or Not), NBER Discussion Paper No. 7552. Dechenaux , E., B. Goldfarb, S. Shane, M. Thursby. 2008. Appropriability and commercialization: Evidence from MIT inventions. Management Science 54 893-906 Eisenhardt, K.M., C.B. Schoonhoven. 1990. Organizational growth: Linking founding team, strategy, environment, and growth among U.S. semiconductor ventures, 1978-1988. Administrative Science Quarterly 35 504-529. Gambardella, A., D. Harhoff, B. Verspagen (2008). ”The Value of European Patents,” European Management Review, 5, 69–84. Gans, J., D. Hsu, S. Stern (2008), The impact of uncertain intellectual property rights on the market for ideas: evidence from patent grant delays, Management Science 54 982-997. Gans, J. S., Hsu, D. H. and Stern, S. (2002), When does start-up innovation spur the gale of creative destruction?. RAND Journal of Economics 33 571-586 Haeussler, C. 2008. The determinants of technology commercialization in German and British biotechnology. Best Paper Proceedings of the Academy of Management, forthcoming. Hall, B.H. 2007. Patents and innovation (and competition). in: OECD (eds.) Competition, patents and innovation. Directorate for financial and enterprise affairs, Competition committee. 243-251 Hall, B.H., G. Thoma, S. Torrisi. 2007. The market value of patents and R&D: Evidence from European firms. NBER Discussion Paper 13426. Hall, B.H., R.H. Ziedonis, R. 2001. The patent paradox revisited: an empirical study of patenting in the U.S. semiconductor industry, 1979-1995. RAND Journal of Economics 32 101-128. Hall, J., C. Hofer. 1993. Venture capitalists' decision criteria in new venture evaluation. Journal of Business Venturing 8 25-42. Harhoff, D., F. Narin, F.M. Scherer, K. Vopel. 1999. Citation frequency and the value of patented inventions. Review of Economics and Statistics 81 511-515. Harhoff, D., M. Reitzig. 2004. Determinants of opposition against EPO patent grants – The case of biotechnology and pharmaceuticals. International Journal of Industrial Organization 22 443-480. Harhoff, D., K. Hoisl, C. Webb. 2006. European patent citations - How to count and how to interpret them, University of Munich Working Paper. Harhoff, D., S. Wagner. 2006. Modeling the duration of patent examination at the European Patent Office. CEPR Discussion Paper No. 5283. Harhoff, D., C. Haeussler, M. Schirge. 2008. Stock market reactions to patent oppositions in biotechnology and pharmaceutical. Working Paper. Hayes, D.L. 1999. What the general intellectual property practitioner should know about patenting business methods. Computer Lawyer 16 3-18. Heller, M.A., R.S. Eisenberg. 1998. Can patents deter innovation? The anticommons in biomedical research. Science 280 698-701. Heil, O., T.S. Robertson. 1991. Toward a theory of competitive market signalling: A research agenda. Strategic Management Journal 12 403-418. Hsu, D.H. 2006. Venture capitalists and cooperative start-up commercialization strategy. Management Science 52(2) 204-219. Hsu, D., R.H. Ziedonis. 2008. Patents as quality signals for entrepreneurial ventures, Academy of Management Best Paper Proceedings. Jaffe, A.B., M. Trajtenberg, B. H. Hall 2005. Market value and patent citations: A first look. Rand Journal of Economics, 36, 18-38. Kortum, S., J. Lerner. 2000. Assessing the contribution of venture capital to innovation. RAND Journal of Economics 31 674-692 Lemley, M.A. 2000. Reconceiving patents in the age of venture capital. Journal of Small and Emerging Business Law 4 137-148. Lemley, M.A. 2001. Rational ignorance at the patent office, 95 Northwestern University of Law Review 1495. Lerner, J. 1994. The importance of patent scope: an empirical analysis. RAND Journal of Economics 25 319-333. Levin, R.C., A.K, Klevorik, R.R. Nelson, S.G. Winter. 1987. Appropriating the returns from industrial research and development. Brookings Papers on Economic Activity 3/1987 783-820. Long, C. 2002. Patent signals. University of Chicago Law Review 69 625-679. MacMillan, I. C., R. Siegel, P.N. Subbanarasimha. 1985. Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business Venturing 1 119-128. Mann, R.J. 2005. Do patents facilitate financing in the software industry?, Texas Law Review 83 961-1030 Mann, R.J., T.W. Sager. 2007. Patents, venture capital, and software start-ups. Research Policy 36 193-208. Ndofor, H.A., E. Levitas. 2004. Signalling the Strategic Value of Knowledge. Journal of Management 30 685-702. OECD 2005. A framework for biotechnology statistics. OECD, Paris. Pitkethly, R. (2008).. “Intellectual Property Rights and Business Method Patents as Venture Capital Investment Incentives,”unpublished manuscript, Oxford University. Shane, S., T. Stuart. 2002. Organizational endowments and the performance of university start-ups. Management Science 48 154-170. Shepherd, D.A., R. Ettenson, A. Crouch. 2000. New venture strategy and profitability: A venture capitalist’s assessment. Journal of Business Venturing 17 1-20. Spence, M. 1973. Job market signaling. Quarterly Journal of Economics 87 355-374. Stinchcombe, A.L. 1965. Social structure and organizations. In: J.G. March (ed), Handbook of Organizations. Rand McNally: Chicago, pp. 142-193. Stuart, T. E., H. Hoang, R.C. Hybels, R. C. 1999. Interorganizational Endorsements and the Performance of Entrepreneurial Ventures. Administrative Science Quarterly 44 315-349. Zott, C., Q.N. Huy. 2007. How entrepreneurs use symbolic management to acquire resources. Administrative Science Quarterly 52 70-105.