NBER Working Papers and Publications
|April 2018||How Redeployable are Patent Assets? Evidence from Failed Startups|
with Carlos J. Serrano: w24526
Entrepreneurial firms are important sources of patented inventions. Yet little is known about what happens to patents “released” to the market when startups fail. This study provides a first look at the frequency and speed with which patents originating from failed startups are redeployed to new owners, and whether the value of patents is tied to the original venture and team. The evidence is based on 1,766 U.S. patents issued to 285 venture capital-backed startups that disband between 1988 and 2008 in three innovation-intensive sectors: medical devices, semiconductors, and software. At odds with the view that the resale market for patented inventions is illiquid, we find that most patents from these startups are sold, are sold quickly, and remain “alive” through renewal fee payment long a...
|October 2014||Patent Collateral, Investor Commitment, and the Market for Venture Lending|
with Yael V. Hochberg, Carlos J. Serrano: w20587
The use of debt to finance risky entrepreneurial-firm projects is rife with informational and contracting problems. Nonetheless, we document widespread lending to startups in three innovation-intensive sectors and in early stages of development. At odds with claims that the secondary patent market is too illiquid to shape debt financing, we find that intensified patent trading increases the annual rate of startup lending, particularly for startups with more redeployable (less firm-specific) patent assets. Exploiting differences in venture capital (VC) fundraising cycles and a negative capital-supply shock in early 2000, we also find that the credibility of VC commitments to refinance and grow fledgling companies is vital for such lending. Our study illuminates friction-reducing mechanisms ...
Published: YaelV. Hochberg & Carlos J. Serrano & Rosemarie H. Ziedonis, 2018. "Patent Collateral, Investor Commitment, and the Market for Venture Lending," Journal of Financial Economics, .