Patent collateral, investor commitment, and the market for venture lending

Yael V. Hochberg, Carlos Serrano and Rosemarie H. Ziedonis

Journal of Financial Economics, 2018, vol. 130, issue 1, 74-94

Abstract: We explore the market for lending to start-ups and two mechanisms that facilitate trade within it: (1) the salability of patent collateral and (2) the credible commitment of equity investors. Intensified trading in the secondary patent market is strongly related to lending, particularly for start-ups with more redeployable patent assets. Utilizing the crash of 2000 as a severe and unexpected capital supply shock for venture capitalists, we further show that lenders continue to finance start-ups with recently funded investors better able to credibly commit to refinance their portfolio companies while withdrawing from otherwise promising projects that could have needed their funds the most.

Keywords: Venture debt; Venture capital; Collateral assets; Patents (search for similar items in EconPapers)
JEL-codes: G24 L14 L26 O16 O3 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63)

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Related works:
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 (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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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:130:y:2018:i:1:p:74-94

DOI: 10.1016/j.jfineco.2018.06.003

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