Venture capital investments and patenting activity of high-tech start-ups: a micro-econometric firm-level analysis

The aim of this paper is to analyse empirically the impact of venture capital (VC) finance on the innovation output of new technology-based firms (NTBFs) as reflected by their patenting activity. In particular, we compare the patenting rates of VC-backed and non-VC-backed NTBFs. To investigate whether VC investments spur patenting activity, we consider a unique longitudinal dataset composed of 351 Italian NTBFs operating in high-tech manufacturing industries and software, 33 of which are VC-backed. We estimate different econometric models on panel data, controlling for factors that may affect a firm's patenting behaviour other than the presence of VC, like founders' human capital and use of other sources of financing. The results show that VC investments positively affect subsequent patenting activity and that before receiving VC, VC-backed firms do not exhibit a higher patenting propensity than other firms.