Working Paper: NBER ID: w17050
Authors: Annamaria Conti; Marie C. Thursby; Frank Rothaermel
Abstract: We present a theoretical model of startup signaling with multiple signals and potential differences in external investor preferences. For a novel sample of technology incubator startups, we empirically examine the use of patents and founder, friends, and family (FFF) money as such signals, finding that they are jointly endogenous to venture capital and business angel investment in the startups. For this sample, venture capitalists appear to value patents more highly than FFF money, while the reverse is true for business angels. Moreover, the impact of patents on venture capitalists is larger than the impact of FFF money on business angels.
Keywords: signaling; venture capital; business angels; patents; entrepreneurship
JEL Codes: G24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patents (O34) | venture capital funding (G24) |
| fff money (G29) | venture capital funding (G24) |
| fff money (G29) | business angel funding (G24) |