For high-tech startups, gaining access to resources and funding is often considered crucial. This need has created technology markets to attract partners and resource providers. Corporate venturing is a form of markets for technology (MfT) that provides nurturing, specialized advice and resources to new technology by investing in startups. However the typical issues involved with MfT – namely misappropriation risks– have made startups reluctant about sharing their key technological information with corporate venture capitalists (CVC), potentially retarding efficient market matching and consequently technology development. Lifting informational constraints may facilitate the market and enable us to measure the pure impact of CVC investment.
Assessing the potential impact of information constraints has been challenging due to severe endogeneity concerns. This study investigates the causal impact of technological information exposure on the likelihood, quality and timing of CVC-startup match formation. We exploit the American Inventor’s Protection Act (AIPA) as an exogenous shock to technological information publicity, which enables us to measure an unbiased impact of information exposure. The results confirm that strategic information withhold by startups has lowered the incident of CVC investments, while informational exposure increases the likelihood, quality and hazard rate of CVC-startup match.
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