Publications

• "Do Patent Assets have a Second Life When Startups Fail? An Analysis of the Redeployment Likelihood and Mode of Transfer," with Rosemarie Ziedonis, 2025, 46(1): 82–113, Strategic Management Journal [Link to Journal] [Version in pdf]

  • • • An earlier version of the paper appeared as NBER Working Paper No. 24526

      • 2019 Academy of Management Best Paper Proceedings

Entrepreneurial firms are fertile sources of patented inventions. Yet little is known about what happens to patent assets when startups fail: Do they have a “second life” through redeployment to new owners? Based on evidence from 257 disbanded VC-backed startups, we document an active resale market for the patents both as standalone assets and through co-movement with inventors to the purchasing organization. We then model and empirically test how the redeployment likelihood and mode of transfer is shaped by trading thickness in the secondary patent market and the degree to which asset value is firm-specific and tied to the original venture. The study sheds new light on conditions that affect the redeployment of intangible assets and the abilities of startups to preserve value in liquidation.

• “Venture Capital Financing in Europe: Gender and Ethnic Diversity in Founder Teams,” with Thomas Astebro and Ramzi Rafih, 2022, 48(9): 250–271, The Journal of Portfolio Management (special issue on Private Markets) [Link to Journal] [Media: Maddyness (in French)] [Media: Knowledge@HEC]

Recent research has shown that venture capital firms (VCs) in the US embarrassingly underfund entrepreneurs who are female, or members of ethnic/racial minorities compared to white men. The authors address the financing of gender and ethnically diverse startup teams in Europe. They use data on all recorded European venture deals over the period 2010 to 2020 for startups that have raised more than USD 1 million including all rounds and financiers, augmented by identifying founders by gender and ethnicity. For these startups, gender diversity on the founding team is not associated with raising VC funding in their first round of financing, while ethnic diversity plays an important role in both the amount of VC funding raised and venture performance in certain sectors and countries. A carefully designed investment strategy that builds on a preference for diverse founding teams in some sectors may therefore provide favorable returns.

• "Information Disclosure and the Market for Acquiring Technology Companies," with George Chondrakis and Rosemarie H. Ziedonis, 2021 42(5): 1024–1053, Strategic Management Journal [Link to Journal] [Version in pdf]

The market for acquiring technology companies is rife with information frictions. Although such frictions can stifle trading activity, they also provide room for strategic gain. We investigate this dual role of information frictions by exploiting an institutional reform that releases technological information to the public domain. Leveraging cross-sectoral variation in the magnitude of disclosure, we find an increase in acquisition activity and in the technological distance between matched pairings. In line with predictions from strategic factor market theory, however, we also find a disproportionate erosion in returns to acquirers better shielded by private sources of information in the pre-reform era. Our findings suggest that information disclosed through the reform facilitated exchange in the takeover market yet had a leveling effect on the returns to acquirers.

• "Patent Trading Flows of Small and Large Firms," with Nicolás Figueroa., Vol. 48 (7), September 2019, pp. 1601–1616, Research Policy [Link to Journal] [Appendix] [Version in pdf] 

This article provides new evidence on the patent trading flows of small and large firms. We document aggregate patterns of patent sales and acquisitions of small and large firms. We also examine the extent to which the initial innovator’s and the potential buyers’ prior knowledge stocks in the same technology area and in geographical proximity with a patented invention are associated with the likelihood that the patent is sold, and whether the patent sold is bought by a small or large firm. To do so, we develop a data set that matches patent sales and information on whether transacted patents are owned by small or large firms following a patent sale.

• "Patent Collateral, Investor Commitment, and the Market for Venture Lending," with Yael V. Hochberg and Rosemarie H. Ziedonis., Vol. 130 (1), October 2018, pp. 74–94, Journal of Financial Economics. [Link to Journal] [Version in pdf] [Media: BSE Focus] [Notebook LM Podcast] 

The use of debt to finance risky entrepreneurial-firm projects is rife with informational and contracting problems. Nonetheless, we document widespread lending to startups in three innovation-intensive sectors and in early stages of development. At odds with claims that the secondary patent market is too illiquid to shape debt financing, we find that intensified patent trading increases the annual rate of startup lending, particularly for startups with more redeployable (less firm-specific) patent assets. Exploiting differences in venture capital (VC) fundraising cycles and a negative capital-supply shock in early 2000, we also find that the credibility of VC commitments to refinance and grow fledgling companies is vital for such lending. Our study illuminates friction-reducing mechanisms in the market for venture lending, a surprisingly active but opaque arena for innovation financing, and tests central tenets of contract theory.

• "Estimating the Gains from Trade in the Market for Patent Rights," Vol. 59 (4), November 2018, pp. 1877–1904. International Economic Review. [Version in pdf]

The "market for patents" – the sale of patents – is an often discussed source of incentives to invest in R&D. This article presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows us to quantify the gains resulting from the transfer of patent rights. The gains from trade measure the private benefits of reallocating the ownership of a patent from the original patentee to a new owner for whom the patent has a higher value. In addition, we study the effect that lowering transaction costs has on the proportion of patents traded and the gains from trade.

• "Intangible but Bankable, " with Yael V. Hochberg and Rosemarie H. Ziedonis. Vol. 348, no. 6240, June 2015, pp. 1202. Science [Link to Journal]

Young science and technology companies are often rich in intangibles but lack physical assets and cash flows required to secure a loan. Intangibles, such as patents, are effectively "unbankable" for traditional lenders because of international banking regulations. Intangibles also are often difficult to value and sell. External debt is therefore widely cast as an unlikely way to fund the risky projects of intangibles-rich companies. Despite this conventional wisdom, we uncover a surprisingly active market for "venture lending" to patent-producing U.S. startups in three innovation-intensive sectors: medical devices, semiconductors, and software.

• "Business Partners: Complementary Assets, Financing, and Invention Commercialization, " with Thomas Astebro. Vol. 24 (2), Summer 2015, pp. 228–252. Journal of Economics and Management Strategy [Link to Journal] [Version in pdf] [Notebook LM Podcast]

This paper assesses the relative importance of the complementary assets and financial capital that business partners may add to the original inventor-entrepreneur. Projects run by partnerships were five times as likely to reach commercialization as those without business partners, and they had mean revenues approximately ten times as great as projects run by solo entrepreneurs. These gross differences may be due both to partners impacting business success that is, who the particular partners were, and to selection of the type of project or of whom to select as a partner. After controlling for selection effects and observed/unobserved heterogeneity, the smallest estimate of complementary assets approximately doubles the probability of commercialization and increases expected revenues by 29% at the sample mean. Our findings suggest that a critical policy option to increase commercialization rates and revenues for early-stage businesses is to support the market for finding skilled partners.

• "Trading and Enforcing Patent Rights," with Alberto Galasso and Mark Schankerman. Vol. 44 (2), Summer 2013, pp. 275–312, The RAND Journal of Economics [Link to Journal] [Version in pdf]

We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.

• "The Dynamics of the Transfer and Renewal of Patents," , Vol. 41, Winter 2010, pp. 686–708, The RAND Journal of Economics [Link to Journal] [Version in pdf]

This article explores new data on the transfer and renewal of U.S. patents and interprets this new evidence using a model of patent transfers and renewal. We find that the proportion of transferred patents is large and differs across technology fields and especially type of patentees. We also find that the probability of a patent being traded depends on a number of factors --the age of the patent, the number of citations received by a given age, the patent generality, and whether the patent has been previously traded or not. These findings are consistent with the predictions of a model of patent transfers and renewals.

Working papers and work in progress

• "Acquiring Patents in Secret: Disclosure Timing in Markets for Technology," with George Chondrakis and Rosemarie Ziedonis. [Version in PDF] Revise and resubmit at Management Science

Markets for technology provide a vibrant channel through which firms purchase ownership rights to patented inventions. Although such transactions enable firms to secure access to intangible assets originating beyond their borders, they also provide cues to competitors regarding the purchasing firm’s technological investments. This study explores the timing of strategic disclosure of patent acquisitions and the conditions under which firms trade the benefits of competitor deterrence through early recordation for those of secrecy through delayed disclosure. Using evidence on the lag between the execution and recording dates for US patents purchased by publicly traded corporations, we predict and find earlier disclosure of patent acquisitions when the buyer works on related technologies and is better positioned to enforce the patents (i.e., is large and relatively litigious). As predicted by the model, we also find that the buyer delays disclosure when the seller is a large firm, suggesting that buyers take advantage of the seller’s ability to deter competitors while keeping the transaction secret. Additional analyses reveal that (a) regulatory changes reducing the value of keeping acquisitions of patent applications secret lead to shorter recording lags, and (b) increases in the enforceability of business method and software patents further accelerate the voluntary recording of patent ownership changes. The study provides new evidence on the tradeoffs that innovating firms face when determining the timing of disclosure for patents they have purchased in technology markets.

• “The Effect of Exposure to Peers in Business School on Career Choices,” (with Thomas Astebro and Ai-Ting Goh)

Projects

• "Economics of mentorship and AI," [Media: Shaping the Future of Mentorship in the ION Management Science Lab - HEC Paris]