Trademarks and Entrepreneurial Firm Success: Theory and Evidence from Venture Capital Investments in Private Firms and Initial Public Offerings
Forthcoming, Entrepreneurship Theory and Practice
67 Pages Posted: 12 Jun 2018 Last revised: 15 Jan 2025
Date Written: September 9, 2018
Abstract
We theoretically model an entrepreneur’s choice of his firm’s products to trademark, the relation between the number of trademarks and VC investment staging, long-run operating performance, and successful firm exit probability. We test model predictions using a large dataset of trademarks registered by VC-backed private US firms. We find that firms with a larger number of trademarks at first VC investment have a smaller number of VC financing rounds; have larger long-run sales and employment; and have greater probabilities of successful exit (IPO or acquisition). Our IV analysis demonstrates that more trademarks causally enhance firm performance and reduce VC staging.
Keywords: Trademarks; Initial Public Offerings (IPOs); Valuation; Private Firm Exit; Post-IPO Operating Performance
JEL Classification: G23, G24, L26, O34
Suggested Citation: Suggested Citation