“How good are VCs at valuing technology? An analysis of patenting and VC investments in nanotechnology”

This paper analyzes how VC firms evaluate the patent portfolios of startup companies in their financing decisions. On one hand, we determine whether the amount of VCs’ financing is associated with the size, technological composition and scope of patent portfolios of startup companies. On the other hand, we examine whether the valuation of patents varies across different types of VC firms, depending on their degree of industry specialization and affiliation. We provide empirical evidence from a sample of 332 VC-backed companies in the nanotechnology sector.