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Money for novelty: The role of venture capital investments for innovation in young technology-based firms

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  • Heger, Diana

Abstract

This paper examines the role of venture capital on a firm's innovation activities by using a data set of German technology-based firms founded between 1996 and 2005. Innovation is proxied by patent counts and an index of innovativeness which reflects the degree to which a young firm has developed new technologies based on its own or external resources. The results show that VC financing has a positive impact on both patenting and innovativeness, even if we account for endogeneity of VC financing.

Suggested Citation

  • Heger, Diana, 2013. "Money for novelty: The role of venture capital investments for innovation in young technology-based firms," ZEW Discussion Papers 13-077, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:13077
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    Keywords

    innovation; venture capital; young technology-based firms; discrete choice methods; count data models; endogeneity;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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