Does VC backing affect brand strategy in technology ventures?

Abstract

Research Summary: The resource-based view of the firm characterizes brands as important resources for firm growth and competitive advantage. Existing studies offer theory and evidence that venture capital (VC) backing enhances the growth of new technology ventures along different dimensions. It is not clear, however, whether and how VC backing affects the development of brand assets. In a study of VC-backed and non-VCbacked nanotechnology ventures in the United Kingdom, we find a positive association between VC backing and the development of brand assets. We also find that VC-backed technology ventures tend to create brand assets with a wider scope, which can be deployed across multiple different product-markets.Managerial Summary: Brand strategy is critical for the success of entrepreneurial firms and can be challenging for firms operating in nascent industries that aim to commercialize innovations stemming from general purpose technologies. Such firms face dilemmas on whether to diversify or not into different product-markets, how many brand assets to develop, and whether to leverage a brand asset across multiple product categories. In a study of nanotechnology ventures, we find that VC-backing can affect the development of brand strategy: VCbacked ventures tend to develop more brand assets compared with non-VC-backed ventures and tend to create brand assets with a wider scope, which can be deployed across multiple different product-markets. K E Y W O R D S brands, new venture strategies, resource-based view, technology ventures, venture capital

Editorial: why and when do firms trademark? Bridging perspectives from industrial organisation, innovation and entrepreneurship

“…They may suffer from severe liabilities of newness (Gruber 2004) and hence may file a trademark as a way to signal their seriousness and professionalism towards external stakeholders (Block et al 2015a). When it comes to investors, De Vries et al (2017) found that VC involvement is an important driver of trademark filing and the building of brand assets (Forti, Munari, and Zhang 2019).…”

The different effects of venture capital and the trade-off between product innovation effectiveness and efficiency

“…For example, we considered the relationship between VC and product-level effectiveness and efficiency, paying little attention to the relationship between VC and brand-level effectiveness and efficiency. A recent study found a positive effect of VC (versus non-VC) on the scope of technology ventures' brand assets (Forti et al, 2020). This study and our study provide a research gap to explore the different effects of CVC and IVC on more brand factors, such as brand diversity and popularity, or to examine their interaction effects with these brand factors.…”

“…For example, we considered the relationship between VC and product-level effectiveness and efficiency, paying little attention to the relationship between VC and brand-level effectiveness and efficiency. A recent study found a positive effect of VC (versus non-VC) on the scope of technology ventures' brand assets (Forti et al. , 2020).…”

“…We further explore the effects of CVC and IVC on the product innovation effectiveness and efficiency of EVs. This can help unearth the product market value of different VC in EVs' innovation chain because EVs typically have technical and scientific backgrounds and rarely possess capabilities for product market development (Forti et al ., 2020).…”

Micro venture capital

“…There is a vast literature on VC that spans strategy, entrepreneurship, and finance. Scholars in these fields have explored how venture capitalists (VCs) select portfolio firms, how they structure their investments (Ewens et al, 2022; Gompers et al, 2020; Kaplan & Strömberg, 2003; Tian, 2011), and how they contribute to new ventures' strategies (Blevins & Ragozzino, 2018; Forti et al, 2020) and financial performance (Conti & Graham, 2020; Dutta & Folta, 2016; Fitza et al, 2009; Hellmann & Puri, 2002). In contrast, we still know little about the investment strategies adopted by emerging entities other than traditional VCs.…”