TY  - JOUR
AU  - Kortum,Samuel
AU  - Lerner,Josh
TI  - Does Venture Capital Spur Innovation?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6846
PY  - 1998
Y2  - December 1998
UR  - http://www.nber.org/papers/w6846
L1  - http://www.nber.org/papers/w6846.pdf
N1  - Author contact info:
Samuel S. Kortum
Department of Economics
Yale University
P.O. Box 208264
New Haven, CT 06520
Tel: 773/702-8251
Fax: 773/702-8490
E-Mail: kortum@uchicago.edu

Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu
M2  - featured in NBER digest on 1999-05-01
AB  - While policymakers often assume venture capital has a profound impact on innovation, that premise has not been evaluated systematically. We address this omission by examining the influence of venture capital on patented inventions in the United States across twenty industries over three decades.  We address concerns about causality in several ways, including exploiting a 1979 policy shift that spurred venture capital fundraising.  We find that the amount of venture capital activity in an industry significantly increases its rate of patenting. While the ratio of venture capital to R&D has averaged less than 3% in recent years, our estimates suggest that venture capital accounts for about 15% of industrial innovations.  We address concerns that these results are an artifact of our use of patent counts by demonstrating similar patterns when other measures of innovation are used in a sample of 530 venture-backed and non-venture-backed firms.
ER  -