Patents, Trademarks, and Their Complementarity in Venture Capital Funding

Technovation, Forthcoming.

31 Pages Posted: 6 Dec 2015

See all articles by Haibo Zhou

Haibo Zhou

University of Nottingham Ningbo China

Philipp G. Sandner

Frankfurt School of Finance & Management

Simon Luca Martinelli

Technische Universität München (TUM)

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Date Written: November 28, 2015

Abstract

This paper analyzes the effects of patents and trademarks in the financing of start-ups through venture capitalists (VCs). Patents and trademarks signal a start-up’s technological and marketing capabilities. We find that patents and trademarks not only have direct effects on venture capital financing but also have complementary effects. Start-ups that apply for both patents and trademarks yield higher VC funding than do those firms that apply for only one of the two IP rights. Furthermore, we find that the complementarity between patents and trademarks exists only in initial VC funding rounds. Our results suggest that early-phase start-ups seeking their initial VC funding do best when stressing both their technology and marketing capabilities. Accordingly, entrepreneurship policy should encourage start-ups to build both technological and marketing capabilities.

Keywords: patents, trademarks, complementarity between patents and trademarks, venture capital funding

JEL Classification: L26, M31, O34

Suggested Citation

Zhou, Haibo and Sandner, Philipp and Martinelli, Simon Luca and Block, Jorn Hendrich, Patents, Trademarks, and Their Complementarity in Venture Capital Funding (November 28, 2015). Technovation, Forthcoming., Available at SSRN: https://ssrn.com/abstract=2696459

Haibo Zhou

University of Nottingham Ningbo China ( email )

199 Taikang East Road
Ningbo, Zhejiang 315100
China
13989343590 (Phone)

Philipp Sandner

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.philipp-sandner.de

Simon Luca Martinelli

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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