Work

How Resilient is Venture-Backed Innovation? Evidence from Four Decades of U.S. Patenting

Year: 2020

Type: report

Abstract: By comparing patenting among VC-backed firms to the universe of U.S. patents over the period 1976-2019, we document that while patents led by VC-backed firms are of significantly higher quality and economic importance than the average patent, VC-backed innovation is substantially more procyclical than innovation in the broader economy.This is driven early-stage startups, whose innovation in recessions is relatively less cited, less original, less general, and less related to fundamental science.Our findings are most consistent with frictions in capital supply playing an important role, leading VCs to change their investment focus during downturns towards less innovative startups.

Source: National Bureau of Economic Research

DOI: 10.3386/w27150

Authors: Sabrina Howell, Josh Lerner, Ramana Nanda, Richard Townsend

Institutions: Organisation de Coopération et de Développement Economiques, National Bureau of Economic Research, Harvard University, University of California San Diego, New York University

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: green

Funders: Harvard Business School, Georgia State University

OpenAlex ID: W3025199664

Cites: 66

Cited by: 61

Related to: 10