Financial signaling by innovative nascent ventures: The relevance of patents and prototypes

David Audretsch (), Werner Bönte () and Prashanth Mahagaonkar

Research Policy, 2012, vol. 41, issue 8, 1407-1421

Abstract: External finance is a central issue for innovative nascent ventures. In this study, we argue that innovative nascent ventures may use patents to signal appropriability and prototypes to signal feasibility to potential investors. Using new data on 906 nascent ventures, we find that nascent ventures with patents or patent applications as well as prototyped innovations are more likely to obtain equity finance. However, nascent ventures that can solely signal appropriability by patenting are not more likely to obtain equity finance. This result may indicate that venture capitalists and business angels assign higher value to the appropriability signal when coupled with feasibility and vice versa.

Keywords: Innovation; Entrepreneurship; Finance; Information asymmetries (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (72)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0048733312000364
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:41:y:2012:i:8:p:1407-1421

DOI: 10.1016/j.respol.2012.02.003

Access Statistics for this article

Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray

More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().