Patents, venture capital, and software start-ups

This paper analyzes the relation between the patenting behavior of startup firms and the progress of those firms through the venture capital cycle. Linking data relating to venture capital financing of software startup firms with data concerning the patents obtained by those firms, we find significant and robust positive correlations between patenting and several variables measuring the firm's performance (including number of rounds, total investment, exit status, receipt of late stage financing, and longevity). The data also show that (1) only about one in four venture-backed software firms acquired even one patent during the period of the study; (2) patenting practices very considerably among the sub-sectors of the software industry; and (3) the relationship between patent metrics and firm performance depends less on the size of the patent portfolio than on the firm's receipt of at least one patent.     

The diminishing signaling value of patents between early rounds of venture capital financing

A long stream of research has documented the positive effects that patents bring about to emerging firms in high technology industries. The general consensus is that patents contribute to firm growth because they confer monopolistic market rights, offer protection from competitors, increase the negotiating position of patent holders and other benefits. What has received relatively less attention in the literature is whether patents act as a signal that attracts investors such as venture capital firms. The handful of studies that have addressed that question has not analyzed whether the signaling function of patents decreases after the initial attraction of venture capital, as information asymmetries between investors and target firms reduce. In this study we hypothesize that patent activity has a signaling value that diminishes once information asymmetries between investors and funded firms lessen. To study our proposition we draw upon a longitudinal dataset of more than 580 U.S.-based biotechnology firms to empirically demonstrate that biotechnology firms that have submitted patent applications substantially increase the level of funding they receive for their first round of financing. In line with a reduction of information asymmetries once the initial investment has materialized, patent applications and granted patents have no effect on the growth of venture capital funds raised during the second round of financing. We conclude the study with a discussion of avenues for new research, implications for policy makers that consider the usefulness of the current patent system and with insights that can be employed by managers of firms in knowledge intensive areas such as biotechnology.     

以风险投资为纽带加快专利成果技术转移

在对我国专利成果转化存在的问题分析基础上,对美国硅谷的经验进行总结,指出国内专利技术与风险投资融合方面存在的突出问题,提出风险投资机构是加快专利成果技术转移的纽带和产学研协同创新中介,并探讨大力发展创业金融、加大风险投资职业经理人培养、加大财政扶持力度、健全法律制度安排、复制硅谷的成功模式的五点措施。     

Factors influencing venture capital perforsmance in emerging technology: The case of China

This study aims to identify the systematic factors influencing venture capital performance in emerging technology. Emerging technologies are the driving force of contemporary economic and social development, but their technologies and markets are subject to great uncertainty. As a high-risk, high-yield investment method, venture capital plays an extremely important role in supporting technological innovation and promoting the upgrading of industrial structures. Following information processing theory, this study applies a quantitative analysis to data from 61 venture capitalists in Beijing, China using structural equation modeling (SEM). The sample firms were established since 2015 and invested mainly in emerging technology startups. The model passed the goodness-of-fit indices test and reveals that information acquisition, venture capital executives, and venture capital strategies have a positive impact on venture capital performance, and venture capital strategies played a partial mediating role.     

The impact of international patent systems: Evidence from accession to the European Patent Convention

We analyze the impact of accession to the regional patent system established by the European Patent Convention (EPC) on 14 countries that acceded between 2000 and 2008. We look at changes in patenting behavior by domestic and foreign applicants at the national patent offices and the European Patent Office (EPO). We find a strong change in patent filing behavior among foreigners seeking patent protection in the accession states, substituting EPO patents for domestic patents immediately. However, there is no discernible reaction among domestic entities in terms of domestic filings, although we do find some evidence that applicants in accession states increased their propensity to file patents with the EPO post-accession. Inventors in accession countries also increase their patent filings slightly post-accession, both at the EPO and at the national offices.     

Creating venture capital industries that co-evolve with high tech: Insights from an extended industry life cycle perspective of the Israeli experience

This paper presents an industry life cycle model of venture capital (VC) and associated startup-intensive high-tech clusters based on the Israeli experience of the last 35 years. Throughout, VC is considered as a new industry, which, when successful, traverses five phases: background conditions, pre-emergence, emergence, restructuring and consolidation. Each phase comprises a number of events and processes, including policy ones. A central process is VC emergence—a cumulative, self-reinforcing process involving a number of interrelated sub-processes. A central sub-process in the Israeli case was VC-startup co-evolution, which was the critical link between the VC emergence and the transformation of the high-tech cluster into a startup-intensive configuration. Our analysis suggests that, provided appropriate background conditions prevail, VC could be central vector in the transformation of existing high-tech clusters.     

Motives to patent: Empirical evidence from Germany

Against the background of the patent upsurge, we first analyse the role of patenting and alternative instruments to protect intellectual property, based on a sample of German companies active in patenting. In a second step, we investigate the motives to patent, considering sector and company size effects. We find that company size matters, both for the importance of instruments and the motives to patent. Especially important are the new strategic motives to patent, like using patents to improve a company's own position in negotiations with partners, licensees and the financial sector, or to use patents as incentives for R&D personnel or performance indicators—these correlate positively with company size. We derive some possible challenges for future patent policies from these insights.     

Profit distribution and compensation structures in publicly and privately funded hybrid venture capital funds

Policy makers have become increasingly concerned at the lack of risk capital available to new and early-stage entrepreneurial ventures. As a public response to a perceived market failure, several governments have set up programs to channel equity finance to capital constrained but high potential, young enterprises. Critically, government support is often directed through the agency of private venture capital funds. We examine the profit distribution and compensation structures used in these hybrid public/private funds. We appraise government policy makers’ ability to use these structures to improve the expected returns in market failure areas in order to attract private sector investors and professional managers to participate in these funds. The results derived from our simulation study suggest that such asymmetric profit sharing models can only resolve relatively modest market failures unless the programs also manage to attract highly competent investors who are able to produce above average gross returns in market failure areas.     

Academic careers, patents, and productivity: industry experience as scientific and technical human capital

We examine career patterns within the industrial, academic, and governmental sectors and their relation to the publication and patent productivity of scientists and engineers working at university-based research centers in the United States. We hypothesize that among university scientists, intersectoral changes in jobs throughout the career provide access to new social networks and scientific and technical human capital, which will result in higher productivity. For this study, the curriculum vitae of 1200 research scientists and engineers were collected and coded. In addition, patent data were collected from the U.S. Patent and Trademark Office. The overarching conclusion from our analysis is that the academic scientists’ and engineers’ research careers we studied are quite different than characterized in the research productivity literature that is a decade or more old. The wave of center creation activity that began in the early 1980s and continues today has resulted not only in greater ties between universities and industry, but also markedly different academic careers.     

Initial public offering and financing of biotechnology start-ups: Evidence from Japan

This study explores the initial public offering (IPO) and financing of biotechnology start-ups in Japan. Using a unique data set, we find that biotechnology start-ups initially backed by venture capital (VC) firms and those originating from universities are more likely to go public within a shorter period. Moreover, we find that neither staged financing nor syndication by VC firms is associated with higher IPO value relative to investment. Furthermore, we provide evidence that the timing of IPOs does not depend on equity market conditions in the biotechnology industry, whereas IPO value tends to depend on equity market conditions. We discuss the factors that explain these findings, which contradict findings in previous studies of VC investments.     

知识资本对高技术企业发展能力的贡献——来自我国高技术上市公司的证据

对高技术企业发展能力问题进行研究不仅可以促进高技术企业自身的健康发展,而且有助于提升综合国力竞争力.以2000-2006年在上海证券交易所和深圳证券交易所交易的111家高技术上市公司为研究对象,构建面板数据模型,对知识资本与高技术企业发展能力之间的关系进行实证分析.研究发现,知识资本对高技术企业的发展能力有积极的贡献,而物质资本对高技术企业发展能力的贡献不明显.因此,高技术企业要谋求发展,应注重知识资本这一"质"的积累、增值和实现,通过各种途径增加企业的人力资本和结构资本.     

Entrepreneurship policy and the financing of young innovative companies: Evidence from the Italian Startup Act

While there is a general consensus that young innovative companies (YICs) need special attention by public policy which should aim at alleviating the financial constraints these firms commonly suffer, much less agreement has been reached on the most effective policy instruments reputed to accomplish the task. In this respect, if the scientific debate has very much revolved around the dilemma about the crowding-in or crowding-out effect of public R&D subsidies to firms, there is a dearth of scientific studies which analyse the effectiveness and potential interrelations of different policy instruments which at the same time and in the same institutional context are offered to YICs. By taking advantage of the Italian Startup Act issued in 2012, we analyse, for the first time, the possible existence of interrelationships between firm access to a Government-guaranteed (GG) bank loan programme and fiscal incentives for venture capital (VC) equity investments. Results suggest two important facts. First, the two mechanisms appear to be functional to different typologies of YICs. Second, VC investments significantly reduce the probability to access GG bank loans. Overall, our analysis highlights a sort of “institutional division of labour” between the two measures and depicts what we label as a Task segmentation effect.     

Sourcing technological knowledge through corporate acquisition: Evidence from an international sample of high technology firms

We investigate the prevalence of the motive to source technological knowledge externally through corporate acquisition. Drawing on make-or-buy and organizational learning theories, we infer the implications of this explanation for the acquirers' pre-acquisition innovative characteristics. Using an international sample of 6106 high technology acquisitions during 1984–2000, we assess the contribution of innovative characteristics to the acquisition likelihood. For firms acquiring small private firms and former subsidiaries—but not public targets—the evidence is consistent with three propositions: (1) A firm's commitment to internal R&D is negatively affected by the decision to acquire; (2) Low R&D productivity increases the likelihood of acquisition; (3) A large knowledge stock predisposes firms to acquire because they perceive they are capable of selecting and absorbing targets. We conclude that acquisitions of small private firms and former subsidiaries are a viable R&D strategy to explore a range of potential future innovation trajectories for large public firms.     

What determines patent value?: Insights from the semiconductor industry

This paper contributes to an understanding which impacts certain patent characteristics have on the value of patent rights. In an exploratory study, 127 individual patents from a semiconductor company were evaluated comprehensively by technical and marketing representatives. The analysis of this rare data shows that for patents used as “bargaining chips”, novelty and inventive activity are most important. Difficulty of inventing around and disclosure turn out to be of limited importance. Due to a selection bias the influence of patent age on its value cannot be determined. The results hint at a differentiated theoretical plausibility of value indicators.     

Venture capital investment strategies under financing constraints: Evidence from the 2008 financial crisis

This paper employs the 2008 financial crisis as an empirical setting to examine how investment strategies of venture capitalists (VCs) vary in the presence of a liquidity supply shock, and what the performance implications of these strategies are for their portfolio startups. We show that while, on aggregate, funded startups receive no less financing during the financial crisis than in non-crisis times, VCs allocate relatively more resources to startups operating in the VCs’ core sectors. We show that this skew allocation follows from VCs choosing to double down on their core-sector investing, rather than by a changed mix of investors or startups during the financial crisis. These effects are strongest for early-stage startups, for which information problems are most severe. Furthermore, these results are driven by the investment strategies of more-experienced VCs. Building on these findings, we find superior ex post performance among crisis-funded portfolio startups operating in more-experienced VCs’ core sectors.     

Performance-based research funding: Evidence from the largest natural experiment worldwide

A performance-based research funding system (PRFS) is a nationwide incentive scheme that promotes and rewards university research performance through competition for government funding. The UK’s PRFS, currently the Research Excellence Framework (REF), is considered the oldest, largest and most developed payment-by-results system in academia worldwide. Surprisingly, and despite the strong criticisms, little has been done to quantitatively and casually evaluate the intended and unintended effects of the PRFSs. In this paper, we evaluate the incremental impact of the REF 2014 in the fields of Economics and Business. We use a synthetic control method to compare the performance of UK universities with their artificial counterfactual units constructed using data from US universities. Our analysis shows, on the whole, that the introduction of the REF had a significant and positive impact on the quantity and quality of the scientific research produced at UK universities. However, we do not find a significant effect on the per author measures, suggesting that the REF did not result in an increase in research productivity. We also show that the effects are more heterogeneous across universities than across academic disciplines. We do not find evidence of a shift of research focus from Economics to Business topics, as some feared. But our analysis indicates that the REF 2014 may have contributed to the concentration of research excellence in elite institutions.     

Green Technologies and diversity in the knowledge search and output phases: Evidence from European Patents

The aim of this study is to investigate technological diversity in the knowledge search and the knowledge output stages of the green inventive process. Exploiting a large sample of European patent data, from 1980 to 2013, the paper explores the degree of diversity in green inventions, comparing the recombinant features of green technologies with a control sample of non-green technologies selected through propensity score matching techniques. Empirical results suggest that green technologies show a higher degree of diversity of the knowledge sources and a higher technological diversity in how knowledge is effectively recombined. We further find that the green diversity premium is higher in the knowledge output phase than in the knowledge search phase. We conclude that the assessment of the role of technological diversity along the different phases of the invention process may improve the appropriate organization of innovative activities and policy design necessary for stimulating green technological developments and support a feasible sustainable transition.     

Where excludability matters: Material versus intellectual property in academic biomedical research

On the basis of survey responses from 507 academic biomedical researchers, we examine the impact of patents on access to the knowledge and material inputs that are used in subsequent research. We observe that access to knowledge inputs is largely unaffected by patents. Accessing other researchers’ materials and/or data, such as cell lines, reagents, or unpublished information is, however, more problematic. The main factors associated with restricted access to materials and/or data include scientific competition, the cost of providing materials, a history of commercial activity on the part of the prospective supplier, and whether the material in question is itself a drug.     

引导基金能引导创投机构投向早期和高科技企业吗?——基于双重差分模型的实证评估

引导创投资本投向早期企业和高科技企业是出台政府引导基金政策的重要目标之一。文章从创投机构层面评估政府引导基金对创投资本投向的引导作用。首先通过CVSource数据库确定管理政府引导基金的创投机构,然后从没有管理政府引导基金的创投机构中选取匹配样本,最后运用双重差分模型检验这两类创投机构投资的差异。研究发现:(1)政府引导基金能引导非国有背景的创投机构投向早期企业,但不能引导国有背景的创投机构投向早期企业;(2)政府引导基金既不能引导非国有背景的创投机构投向高科技企业,也不能引导国有背景的创投机构投向高科技企业。由此可知,政府引导基金政策只对部分创投机构起到了引导作用。     

南京市高校利用创业投资转化科技成果问题的实证研究

从创业投资机构对南京市高校科技成果投资不足的问题出发,通过对创业投资机构、高校科研人员以及大学科技园企业的调查,研究了影响创业投资机构投资于高校科技成果的主要障碍因素,并提出了相应的对策.