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Trademarks and Entrepreneurial Firm Success: Theory and Evidence from Venture Capital Investments in Private Firms

Author

Listed:
  • Onur Bayar
  • Thomas J. Chemmanur
  • Harshit Rajaiya
  • Xuan Tian
  • Qianqian Yu

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. JEL code: G23, G24, L26, O34

Suggested Citation

  • Onur Bayar & Thomas J. Chemmanur & Harshit Rajaiya & Xuan Tian & Qianqian Yu, 2025. "Trademarks and Entrepreneurial Firm Success: Theory and Evidence from Venture Capital Investments in Private Firms," Entrepreneurship Theory and Practice, , vol. 49(3), pages 846-882, May.
    • Handle: RePEc:sae:entthe:v:49:y:2025:i:3:p:846-882
    DOI: 10.1177/10422587241300438
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    More about this item

    Keywords

    trademarks; venture capital staging; long-run sales; long-run employment; private firm exit;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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