Patent protection is critical for investment in biotechnology
Brenda Simon, (professor, California Western School of Law), 2020, Patents, Information, and Innovation, 85 Brook. L. Rev. (). Available at: https://brooklynworks.brooklaw.edu/blr/vol85/iss3/4
In the 2008 Berkeley Patent Survey, both biotechnology and medical device startups reported that patent protection was important for obtaining investment. From the investors’ perspective, the survey found patents are important in the decision about whether to invest in both biotechnology and medical device startups. Venture capitalists typically expect an emerging company to have filed for patent protection prior to providing investment funds. Consistent with the earlier work of Clarissa long on patent signaling, the survey confirmed that patents often provide a fairly inexpensive way of credibly conveying information about the firm that holds them that is otherwise difficult to obtain, reducing information asymmetries between patent holders and investors.