Venture Capital and Innovation
type: CreativeWork
description: This dissertation delves into the relation between venture capital and innovation. The existing literature usually addresses this question by using industry-level data. In contrast, the analysis here relies on data at the company level on patents invented in venture-backed companies. The dissertation has four parts. The first part, a paper coauthored with my advisors Bruce Kogut and Morten Sorensen, examines the relation between venture capital and the rate and quality of companies' innovative activity. We compare the number of patent filings, and the quality of innovations, before and after companies are first financed by a venture capital investor. As an attempt to control for the endogeneity of venture capital investments we exploit amendment by the Texas Legislature that freed public state pension funds in Texas to invest in venture capital. Our results suggest that venture funding increases the rate of companies' innovative activity. Interestingly, we also find that venture capital is associated with a decrease in the quality of companies' research output. The second part estimates the effect of venture capital on the diffusion of knowledge. I compare citations to patents invented in venture-backed companies to those of comparable patents invented elsewhere. To isolate the causal effect, I exploit time variation in the assets of state pension funds that allocate capital to venture capital. This variation provides a valid instrument if the effect of changes in innovation opportunities within a state is uniform across local patents in the same technology-class and vintage-year. I find that after venture funding annual citations to a given patent increase 19% relative to the citations of comparable patents. Additional results are consistent with two mechanisms: venture capital investors certify the value of patents to the general public and facilitate communication among companies in their portfolios. The third part of this dissertation explores whether the strate…
abstract: This dissertation delves into the relation between venture capital and innovation. The existing literature usually addresses this question by using industry-level data. In contrast, the analysis here relies on data at the company level on patents invented in venture-backed companies. The dissertation has four parts. The first part, a paper coauthored with my advisors Bruce Kogut and Morten Sorensen, examines the relation between venture capital and the rate and quality of companies' innovative activity. We compare the number of patent filings, and the quality of innovations, before and after companies are first financed by a venture capital investor. As an attempt to control for the endogeneity of venture capital investments we exploit amendment by the Texas Legislature that freed public state pension funds in Texas to invest in venture capital. Our results suggest that venture funding increases the rate of companies' innovative activity. Interestingly, we also find that venture capital is associated with a decrease in the quality of companies' research output. The second part estimates the effect of venture capital on the diffusion of knowledge. I compare citations to patents invented in venture-backed companies to those of comparable patents invented elsewhere. To isolate the causal effect, I exploit time variation in the assets of state pension funds that allocate capital to venture capital. This variation provides a valid instrument if the effect of changes in innovation opportunities within a state is uniform across local patents in the same technology-class and vintage-year. I find that after venture funding annual citations to a given patent increase 19% relative to the citations of comparable patents. Additional results are consistent with two mechanisms: venture capital investors certify the value of patents to the general public and facilitate communication among companies in their portfolios. The third part of this dissertation explores whether the strate…
author: Gonzalez Uribe, Juanita
language: English
keywords: Finance
date published: 2013
date modified: 2026-07-24T01:44:31Z
provider: Columbia University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Columbia University

PropertyValue
property ID: DOI
value: 10.7916/D8X354NH