NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Show Me the Right Stuff: Signals for High Tech Startups

Annamaria Conti, Marie C. Thursby, Frank Rothaermel

NBER Working Paper No. 17050
Issued in May 2011
NBER Program(s):   PR

We present a theoretical model of startup signaling with multiple signals and potential di erences 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, nding 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.

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This paper was revised on February 7, 2013

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