Patents as Signals for Startup Financing

Conti, Annamaria; Thursby, Jerry G.; Thursby, Marie C.

doi:10.3386/w19191

Cited by 65 publications

(91 citation statements)

References 57 publications

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“…First, patents can soften the impact of product market rivalry with large firms and improve the ability of small firms to license their innovation to large firms for commercialization (Gans, Hsu, and Stern, ; Gans and Stern, ). Second, patents may enhance the ability of small firms to access debt and venture capital finance (Conti, Thursby, and Thursby, ; Hochberg, Serrano, and Ziedonis, ). Finally, patents serve as valuable bargaining chips to get access to patented inputs needed for research and help resolve disputes through cross‐licensing and other arrangements (Lanjouw and Schankerman, ; Galasso, ).…”

Section: Explaining the Impact For Small Firmsmentioning

confidence: 99%

“…Small firms face difficulty in financing their innovation due to information asymmetries in capital markets (Hall and Lerner, ). Recent empirical studies show these frictions can be mitigated through debt and venture capital secured by patents (Conti, Thursby, and Thursby, ; Hochberg, Serrano, and Ziedonis, ; Farre‐Mensa, Hegde, and Ljungqvist, ). If our finding that patent invalidation causes a decline in innovation by small firms is driven by this channel, we would expect to observe a larger reduction for small firms that rely on the (subsequently invalidated) patent to obtain finance.…”

Section: Explaining the Impact For Small Firmsmentioning

confidence: 99%

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Patent rights, innovation, and firm exit

Galasso

Schankerman

2018

The RAND J of Economics

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We study the causal impact of patent invalidation on subsequent innovation and exit by patent holders. The analysis uses patent litigation data from the US Federal Circuit Court and exploits random allocation of judges to control for endogeneity of the decision. Invalidation causes patent holders to reduce patenting over a five‐year window by 50% on average, but the effect is heterogeneous. The impact is large for small‐ and medium‐sized firms, particularly where they face many large competitors, and for patents central to their research portfolio. We find no significant effect for large firms. Invalidation also increases exit from patenting by small firms.

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Section: Explaining the Impact For Small Firmsmentioning

confidence: 99%

Section: Explaining the Impact For Small Firmsmentioning

confidence: 99%

Patent rights, innovation, and firm exit

Galasso

Schankerman

2018

The RAND J of Economics

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“…Our model is closely related to that of Conti et al . (), but differs from it in three respects. First, Conti et al .…”

Section: Introductionmentioning

confidence: 94%

“…In our model, project value is assumed to be independent of patent level (i.e., the signal is unproductive), so we can easily obtain closed‐form solutions that are not provided by Conti et al . ().…”

Section: Introductionmentioning

confidence: 97%

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Startup Financing with Patent Signaling under Ambiguity

Hahn

Kim

Kwon

2017

Asia-Pac J of Fin Stud

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One of the most important challenges for startup companies is securing financing. Indeed, it is crucial for startups to demonstrate their projects’ profitability to potential investors. We develop a model of single‐stage startup financing with signaling under ambiguity. Nature determines the ability of a technology entrepreneur (startup), who strategically chooses a costly patent level to signal his ability to potential investors. Because the project undertaken by a startup may involve highly innovative technology and may not be well known to agents, they might face ambiguity about the value of the project. To examine ambiguity effects on startup financing, we provide three different financing models in view of the degree of ambiguity: (i) no ambiguity; (ii) only investors face ambiguity; (iii) all agents face ambiguity. In each model, we derive perfect Bayesian equilibria and refine them into a unique equilibrium by imposing the Intuitive Criterion of Cho and Kreps (Quarterly Journal of Economics, 102, 1987, 179) or its extension. We analyze the refined equilibria from the perspectives of agents’ equity shares and expected profits, and equilibrium patent levels.

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Does the national risk of overseas investment affect the strategic innovation behavior of enterprises? Evidence from China

2021

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From the micro‐perspective of enterprises, this paper makes an empirical analysis on how the national risk of overseas investment affects the strategic innovation behavior of enterprises by using the samples of A‐share listed companies in China from 2010 to 2019 and emphatically tests the mechanism of the national risk of overseas investment on the strategic innovation behavior of enterprises through government subsidy and media attention. It is found that, on the whole, the national risk of overseas investment will promote the strategic innovation behavior of enterprises. In terms of mechanism, the national risk of overseas investment promotes the strategic innovation behavior of enterprises by increasing the access to government subsidy, while the mediating effect of the media attention to the national risk of overseas investment on the strategic innovation behavior of enterprises is the masking effect; that is, the national risk of overseas investment inhibits strategic innovation behavior of enterprises by increasing media attention, and this indirect inhibition weakens the direct promotion of the national risk of overseas investment to strategic innovation behavior of enterprises.

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Patents as Signals for Startup Financing

Cited by 65 publications

References 57 publications

Patent rights, innovation, and firm exit

Patent rights, innovation, and firm exit

Startup Financing with Patent Signaling under Ambiguity

Does the national risk of overseas investment affect the strategic innovation behavior of enterprises? Evidence from China

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