Patent collateral, investor commitment and the market for venture lending

Yael V. Hochberg Yael V. Hochberg, Carlos Serrano and Rosemarie H. Ziedonis
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Yael V. Hochberg Yael V. Hochberg: RICE UNIVERSITY, MIT & NBER
Rosemarie H. Ziedonis: UNIVERSITY OF OREGON & STANFORD UNIVERSITY

No 1519, Working Papers from Banco de España

Abstract: This paper investigates the market for lending to technology startups (i.e. venture lending) and examines two mechanisms that facilitate trade within it: the ’saleability’ of patent collateral and financial intermediaries. We find that intensified trading in the secondary market for patent assets increases the annual rate of startup lending, particularly for startups with more re-deployable patent assets. Moreover, we show that the credibility of venture capitalist commitments to refinance and grow fledgling companies is vital for startup debt provision. Following a severe and unexpected capital supply shock for VCs, we find a striking flight to safety among lenders, who continue to finance startups whose investors are better able to credibly commit to refinancing their portfolio companies, but withdraw from otherwise promising projects that may have most needed their funds. The findings are consistent.

Keywords: fi nancing innovation; patent collateral; venture capital; market for patents. (search for similar items in EconPapers)
JEL-codes: G24 L14 L26 O16 O3 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2015-07
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent, nep-ind, nep-ino, nep-ipr and nep-pr~
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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... /15/Fich/dt1519e.pdf First version, July 2015 (application/pdf)

Related works:
Journal Article: Patent collateral, investor commitment, and the market for venture lending (2018)
Working Paper: Patent Collateral, Investor Commitment, and the Market for Venture Lending (2015)
Working Paper: Patent collateral, investor commitment, and the market for venture lending (2015)
Working Paper: Patent Collateral, Investor Commitment, and the Market for Venture Lending (2014)
Working Paper: Patent collateral investor commitment and the market for venture lending (2014)
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