Show Me the Right Stuff: Signals for High Tech Startups

51 Pages Posted: 16 May 2011 Last revised: 2 Feb 2023

See all articles by Annamaria Conti

Annamaria Conti

Fundación Instituto de Empresa, S.L. - IE Business School

Marie C. Thursby

Georgia Institute of Technology - Strategic Management Area; National Bureau of Economic Research (NBER)

Frank T. Rothaermel

Georgia Institute of Technology; Georgia Institute of Technology - Scheller College of Business

Date Written: May 2011

Abstract

We present a theoretical model of startup signaling with multiple signals and potential differences in external investor preferences. For a novel sample of technology incubator startups, we empirically examine the use of patents and founder, friends, and family (FFF) money as such signals, finding that they are jointly endogenous to venture capital and business angel investment in the startups. For this sample, venture capitalists appear to value patents more highly than FFF money, while the reverse is true for business angels. Moreover, the impact of patents on venture capitalists is larger than the impact of FFF money on business angels.

Suggested Citation

Conti, Annamaria and Thursby, Marie C. and Rothaermel, Frank T., Show Me the Right Stuff: Signals for High Tech Startups (May 2011). NBER Working Paper No. w17050, Available at SSRN: https://ssrn.com/abstract=1841287

Annamaria Conti

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Marie C. Thursby

Georgia Institute of Technology - Strategic Management Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Frank T. Rothaermel

Georgia Institute of Technology ( email )

800 West Peachtree Street NW
Atlanta, GA 30308-1149
United States
404-385-5108 (Phone)
404-894-6030 (Fax)

HOME PAGE: http://mgt.gatech.edu/rothaermel

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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