Patent collateral, investor commitment, and the market for venture lending

This paper investigates the market for lending to technology startups (i.e., venture lending) and examines two mechanisms that may facilitate trade within it: (1) the ‘salability’ of patent collateral; and (2) the credible commitment of existing equity investors. We find that intensified trading in the secondary patent market is strongly related to the annual rate of startup lending, particularly for startups with more redeployable patent assets. Moreover, we show that the credibility of venture capitalist commitments to reinvest in their startups’ next round of financing can be critical for startup debt provision. Utilizing the crash of 2000 as a severe and unexpected capital supply shock for VCs, we show that lenders continue to finance startups with recently funded investors better able to credibly commit to refinance their portfolio companies, but withdraw from otherwise-promising projects that may have needed their funds the most. The findings are consistent with predictions of incomplete contracting and financial intermediation theory.Accepted manuscrip

All Things Considered? – Technology Design Decision-making Characteristics in Digital Startups

Digital startups offer innovative products, for which they require a suitable technology solution. Choosing an appropriate technology design among the range of available designs is crucial, as the wrong design decision could have disastrous consequences for product development and quality, and waste valuable resources. While the literature has highlighted the role played by the decision context, little is known about ‘how’ technology design decisions are reached in digital startups. Using an exploratory research design, we investigate how technology design decisions are made in digital startups, and identify decision-making characteristics, consisting of three decision paradigms and seven decision attributes. Our empirical evidence suggests that in addition to the decision context, these decision-making characteristics play an important role in enabling digital startups to reach satisfactory technology design decisions. Our study thus lays the basis for more research on the topic, contributing to knowledge and practice of digital startups

Patent disclosure and venture financing: The impact of the American Inventor's Protection Act on corporate venture capital investments

Research Summary We investigate the effects of patent disclosure on corporate venture capital (CVC) investments in technology startups. Toward this end, we focus on the passage of the American Inventor's Protection Act (AIPA), which mandated public disclosure of patent applications. Theoretically, technology disclosure enables CVCs to better evaluate startups and thus, could increase the likelihood of investment relations. Conversely, such disclosure may already satisfy the technology-acquisition objectives of CVCs, reducing CVCs willingness to form an investment relation after disclosure. Our empirical analysis finds that patent disclosure through AIPA increased the likelihood of receiving CVC investments for startups-specifically in industries where patents have higher information significance. We provide evidence that the observed pattern is mainly driven by a reduction of information constraints regarding startups with patent applications. Managerial Summary Receiving corporate venture capital (CVC) funding is an important success factor for technology startups. Would disclosure of a startup's innovation increase or decrease its chance of receiving CVC funding? On the one hand, disclosure by startups would reduce uncertainty and search costs for CVC investors, which could increase the chance of CVC funding. On the other hand, such a disclosure would reveal the startups' technology to the corporations, which would in turn reduce corporate incentive to use funding as awindow to the startup's technology. Thus, disclosure could also reduce the chance of CVC funding of startups. In this paper, we study the above issue by examining the case of the American Inventor's Protection Act (AIPA), which mandated public disclosure of patent applications. Our results suggest that innovation disclosure significantly improves the likelihood of CVC funding of startups

How Startups Help Cities Measure Their Economic Development Frontier

This Fact Sheet provides data on the ability of Metropolitan Statistical Areas (MSAs) in the Mountain West to foster innovative and technology-driven industries, utilizing information presented by the Brookings Institution report, “How startups help cities measure their economic development frontier

Initial Coin Offerings: Innovation, Democratization and the SEC

Initial coin offerings are a source of controversy in the world of startup fundraising, and their legality is, at best, an open question. Amid soaring valuations and rumors of looming SEC action, investors and issuers alike are scrambling to forge a path forward for the token-based startups of tomorrow. While issuers may soon be forced to comply with United States securities laws, the existing regime is inadequate because it does not allow startups to capture the unique benefits of coin sales and, more importantly, it does not allow eager American investors to take part in funding the world’s next generation of technology companies

How does technology startups increase innovative performance? The study of technology startups on innovation focusing on employment change in Korea

As the fourth industrial revolution has been emerging, there are concerns of labor forces being replaced by technology, recent interest on the work-life balance, and the quality of employment has received attention. This study investigates the role of technology startups on employment and innovative performance. Using empirical data from workplace panel data provided by the Korea Labor Institute, this study reveals that technology startups impact the employment quality and innovative performance by the action of technological innovation. The results highlight the quality of employment as a driver for innovative performance in technology startups. The results of this study will provide practical implications for enhancing technology entrepreneurship

The habitat of university and non-university startups

The habitat concept is been demonstrated as a crucial environment surrounding startups. The aim of this paper is to examine the differences between startups born in the university and startups born in science parks. Using a multilevel analysis, we compile a unique dataset of 242 Spanish-based technology startups and distinguish between university startups (122) and non-university startups (120). Likewise, demographic profiles and business characteristics are used in the analysis. Consistent with other research, our results indicate that university startups have more opportunities to obtain financial resources and to develop innovations. By contrast, non-university startups involve entrepreneurs with more experience

Blueprint and Approach to Grow Revenue in Small Technology Companies

This article examines a new approach to grow the revenue of small technology companies and technology startups. We name this new approach the business ecosystem approach. The article is organized into five sections. The first section provides a blueprint to grow revenue and an inventory of growth formulas that top management teams of small technology companies and founders of startups find useful. The second section briefly defines business ecosystems, keystones and platforms. The third section describes the business ecosystem approach to grow the revenue of small technology companies and technology startups. It compares the traditional and business ecosystem approaches to growing revenue; identifies when the business ecosystem approach works better than the traditional approach; explains what small companies and startups need to do to grow revenue using the business ecosystem approach; and describes the benefits and risks of implementing the business ecosystem approach. The fourth section compares three approaches to growing revenue and highlights the differences between i) business ecosystems and development communities and ii) the business ecosystem approach and outsourcing. The fifth section identifies the key decisions a small technology company or technology startup needs to make to become the keystone that anchors a business ecosystem

Using export market performance to evaluate regional preferential policies in China.

We apply program evaluation methods to analyze the effectiveness of two types of preferential regional policy programs in China's manufacturing sector. Economic and Technological Development Zones (ETDZs) aim to facilitate firms' internationalization strategies. Science and Technology Industrial Parks (STIPs) aim to generate technology spillovers. We focus on various dimensions of export market performance as objective indicators for the upgrading of product quality and firm operations. We compare startups that locate into one of these zones with other startups, while controlling for self-selection. The findings suggest that firms locating in an ETDZ do much better on sheer quantity of trade, i.e. the total volume of exports and number of destinations are higher. Firms locating in a STIP perform best on `quality' dimensions, in particular they fetch higher export prices, even by destination and especially for firms producing machinery.