Trademarks and venture capital valuation

Block, Joern; Vries, Geertjan De; Schumann, Jan H.; Sandner, Philipp

doi:10.1016/j.jbusvent.2013.07.006

Cited by 170 publications

(138 citation statements)

References 102 publications

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“…Hence, we have to exclude the cost dimension from our analysis. Folta 2003, 2006;Block et al 2014). Hence, we suggest that a negative relationship exists between the number of updates posted and their effect on crowd participation:…”

Section: Visibility Of Updates and Its Effects On Crowd Participationmentioning

confidence: 82%

“…However, during a crowdfunding campaign which typically has a funding period of around two months, new developments which can be communicated to investors are limited. An increasing number of updates might even be perceived by investors as unreliable or cheap talk as no further information value can be delivered (Perkins and Hendry 2005;Block et al 2014). Therefore, we expect that the marginal value of updates will decrease as the updates no longer provide much additional value to potential investors 1 As we do not observe the start-ups over a longer time period, we cannot evaluate if the signals send during the campaign are reliable and costly for the signaller.…”

Section: Visibility Of Updates and Its Effects On Crowd Participationmentioning

confidence: 94%

“…It has been found that specific information, such as education of the entrepreneurial team, protection of intellectual property rights, the venture's network, and firm alliances, are important drivers for the investment decisions of professional early-stage investors such as venture capital funds (Audretsch et al 2012;Baum and Silverman 2004;Block et al 2014Block et al , 2017aBusenitz et al 2005;Franke et al 2008;Jell et al 2011). It has also been shown that start-ups use this information to signal their value to investors (Audretsch et al 2012;Block et al 2014;Connelly et al 2011). Hence, our paper contributes to research about signals in entrepreneurial finance by looking at the specific context of crowdfunding and crowdinvestors as a new type of venture investor.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Which updates during an equity crowdfunding campaign increase crowd participation?

2017

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Start-ups often post updates during equity crowdfunding campaigns. However, little is known about the effects of such updates on crowd participation. We investigate this question by using hand-collected data from 71 funding campaigns and 39,399 investment decisions on two German equity crowdfunding portals. Using a combination of different empirical research techniques, we find that posting an update has a significant positive effect on the number of investments made by the crowd and the investment amount collected by the start-up. This effect does not occur immediately in its entirety; rather, it lags the update by a few days. Furthermore, the effect of updates loses statistical significance with the number of updates posted during a campaign. We also find that an easier language used in updates increases crowd participation, whereas the length of updates has no effects. With respect to the update's content, we find that the positive effect can be attributed to updates about new developments of the start-up such as campaign developments, new funding, business developments, and cooperation projects. Updates on the start-up team, business model, product developments, and promotional campaigns do not have meaningful effects. Our paper contributes to the literature on the effects of information disclosure on equity crowdfunding participation. Furthermore, our results have practical implications for start-ups and their investor communication during equity crowdfunding campaigns.

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Section: Visibility Of Updates and Its Effects On Crowd Participationmentioning

confidence: 82%

Section: Visibility Of Updates and Its Effects On Crowd Participationmentioning

confidence: 94%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Which updates during an equity crowdfunding campaign increase crowd participation?

2017

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“…The outcome variable of our multilevel analysis is a startup's post-money valuation (i.e., the valuation after a financing round, including the amount invested); a variable regularly used in the VC literature (e.g., Block et al 2014;Yang et al 2009). We included with level 1 (startups), startup characteristics related to financing round, startup age at CVC investment, industry and location as predictor variables (e.g., Heughebaert and Manigart 2012).…”

Section: Measures and Descriptive Statisticsmentioning

confidence: 99%

A world of difference? The impact of corporate venture capitalists’ investment motivation on startup valuation

et al. 2017

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Corporate venture capital (CVC) investors are regularly painted with the same brush, a fact underscored by the often observed belief in the extant literature that corporate venture capitalists (CVCs) form a homogeneous group. In contrast to this simplifying perspective, this paper categorizes CVCs into subgroups by examining their levels of strategic and financial investment motivation using computer-aided text analysis and cluster analysis. To validate the resulting clusters, this paper studies the impact of CVC type on startup valuation from an intra-group perspective by applying hierarchical linear modeling, thus illustrating which particular investment motivation might be preferable to others in the context of negotiating valuations. An empirical analysis of 52 CVC mission statements and 147 startup valuations between January 2009 and January 2016 revealed that first, CVCs with a strategic investment motivation assign lower startup valuations than CVCs with an analytic motivation that have moderate levels of the two scrutinized dimensions, suggesting that entrepreneurs trade off these CVCs' value-adding contributions against a valuation discount; second, CVCs with an unfocused investment motivation pay significantly higher purchase prices, thus supporting the hypothesis that they have a so-called liability of vacillation; and third, the valuations of CVCs with a financial investment motive are not significantly different from JEL Classification C12 Á C30 Á C38 Á G24 Á G32 Á M13

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“…The unique business model of venture lenders seems to contradict entrepreneurial finance theory. High levels of uncertainty reflected in the liability of smallness and newness (Brüderl, Preisendörfer, & Ziegler, 1992) lead to the expectation that debt-based financing forms are seldom suitable for innovative start-ups due to the underlying business and financial risks (Block, De Vries, Schumann, & Sandner, 2014;Colombo & Grilli, 2007;Westhead & Storey, 1997). Our aim is to understand how venture lenders are able to overcome these obstacles and to structure their financing instruments according to the inherent risks.…”

Section: Introductionmentioning

confidence: 99%