Abstract
We theoretically model an entrepreneur’s choice of his firm’s products to trademark, the relation between the number of trademarks and venture capital (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 (initial public offering [IPO] or acquisition). Our instrumental variable analysis demonstrates that more trademarks causally enhance firm performance and reduce VC staging.
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