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SUMMARY:Venture Capital\, Patents and Innovation - Roberta Dessi\, Toulous
 e School of Economics (joint with Nina Yin). 
DTSTART:20130305T170000Z
DTEND:20130305T180000Z
UID:TALK43204@talks.cam.ac.uk
CONTACT:Sheryl Anderson
DESCRIPTION:This paper identifies a new channel through which venture capi
 tal helps to promote innovative start-ups. Venture capitalists typically h
 ave access to a great deal of inside information about the innovative entr
 epreneurial start-ups they finance\, and considerable opportunities to tra
 nsfer valuable knowledge between different companies in their portfolio. T
 he existing theoretical literature on venture capital has focused primaril
 y on the potential negative consequences\, namely expropriation of ideas b
 y venture capitalists\, and ways in which this problem might be reduced. T
 he main novelty in our approach is to also consider the potential benefits
  of knowledge transfer implemented privately by the venture capitalist\, a
 nd analyse the resulting trade-offs. We study first the simpler case of fi
 rms whose innovative knowledge does not fall in the category of intellectu
 al property that can be protected by a patent. We then examine the case wh
 ere patent protection is feasible in principle\, but there is some uncerta
 inty ex ante as to whether the innovation will succeed in obtaining a pate
 nt (e.g. whether it will satisfy the requirements of novelty and non-obvio
 usness). In both cases we establish the conditions for an innovative start
 -up to prefer financing by a venture capitalist (VC) rather than a non-VC 
 investor. The paper therefore adds a new rationale for VC financing to the
  ones that have already received considerable attention in the theoretical
  literature (monitoring\, screening\, and the provision of advice and supp
 ort by the VC).\n\n\n
LOCATION:Barbara White Room\, Newnham College
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