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Patents and the Success of Venture-Capital Backed Startups: Using Examiner Assignment to Estimate Causal Effects

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  • Patrick Gaule

Abstract

I study how patents affect firm success (initial public offering or acquisition at a high price) in a sample of 2,191 U.S. startups applying for patent protection in the 24 months following their first round of venture capital funding. I observe both successful and unsuccessful patent applications and use a measure of patent exam- iner leniency as an instrument for getting patents. I find a positive effect of patents on firm success for life science firms but not for information technology firms.

Suggested Citation

  • Patrick Gaule, 2015. "Patents and the Success of Venture-Capital Backed Startups: Using Examiner Assignment to Estimate Causal Effects," CERGE-EI Working Papers wp546, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp546
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    References listed on IDEAS

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    Cited by:

    1. Freilich, Janet & Shahshahani, Sepehr, 2023. "Measuring follow-on innovation," Research Policy, Elsevier, vol. 52(9).
    2. Kong, Nancy & Dulleck, Uwe & Jaffe, Adam B. & Sun, Shupeng & Vajjala, Sowmya, 2023. "Linguistic metrics for patent disclosure: Evidence from university versus corporate patents," Research Policy, Elsevier, vol. 52(2).
    3. Nagler, Markus & Sorg, Stefan, 2020. "The disciplinary effect of post-grant review – Causal evidence from European patent opposition," Research Policy, Elsevier, vol. 49(3).
    4. Nagler, Markus & Sorg, Stefan, 2019. "The Disciplinary Effect of Post-Grant Review," Rationality and Competition Discussion Paper Series 155, CRC TRR 190 Rationality and Competition.
    5. Heidi L. Williams, 2017. "How Do Patents Affect Research Investments?," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 441-469, September.
    6. Cesare Righi & Davide Cannito & Theodor Vladasel, 2023. "Continuing Patent Applications at the USPTO," Working Papers 1382, Barcelona School of Economics.
    7. Rajaiya, Harshit, 2023. "Innovation Success and Capital Structure," Journal of Corporate Finance, Elsevier, vol. 79(C).
    8. Joan Farre‐Mensa & Deepak Hegde & Alexander Ljungqvist, 2020. "What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”," Journal of Finance, American Finance Association, vol. 75(2), pages 639-682, April.
    9. Michael J. Andrews, 2021. "Historical patent data: A practitioner's guide," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 368-397, May.
    10. Donald E. Bowen & Laurent Frésard & Gerard Hoberg, 2023. "Rapidly Evolving Technologies and Startup Exits," Management Science, INFORMS, vol. 69(2), pages 940-967, February.
    11. Righi, Cesare & Cannito, Davide & Vladasel, Theodor, 2023. "Continuing patent applications at the USPTO," Research Policy, Elsevier, vol. 52(4).
    12. Daniel Alonso-Martínez & Nuria González-Álvarez & Mariano Nieto, 2021. "Does international patent collaboration have an effect on entrepreneurship?," Journal of International Entrepreneurship, Springer, vol. 19(4), pages 539-559, December.
    13. Cesare Righi & Davide Cannito & Theodor Vladasel, 2023. "Continuing patent applications at the USPTO," Economics Working Papers 1855, Department of Economics and Business, Universitat Pompeu Fabra.
    14. Nikhil Ramkrishna Bandodkar & Renu Singh, 2022. "Small and Startup IT Firms, Information Chasms, and the Market for Acquisitions," Businesses, MDPI, vol. 2(3), pages 1-21, September.
    15. Righi, Cesare & Simcoe, Timothy, 2019. "Patent examiner specialization," Research Policy, Elsevier, vol. 48(1), pages 137-148.

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    More about this item

    Keywords

    patents; entrepreneurship; venture capital; patent examiners; acquisition; initial public offering;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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