How Resilient is Venture-Backed Innovation? Evidence from Four Decades of U.S. Patenting / Sabrina T. Howell, Josh Lerner, Ramana Nanda, Richard R. Townsend.

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Howell, Sabrina T

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w27150.Publication details: Cambridge, Mass. National Bureau of Economic Research 2020.Description: 1 online resource: illustrations (black and white)Subject(s):

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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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w27150 (Browse shelf(Opens below))	Not For Loan

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May 2020.

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.