Delay collapses startup’s ability to get VC funding.

We also estimate the effects of delays in reviewing patent applications that are eventually approved. Here, we combine exogenous variation arising from two sources: the time it takes to assign patent applications to examiners and individual examiners’ historical review speeds. We find that delays adversely affect startups’ employment and sales growth, subsequent innovation, and probability of going public or being acquired. Together with our evidence showing that patents facilitate access to VC funding, these findings suggest that the negative effects of review delays are transmitted via a reduced chance of securing growth capital. When delays are substantial, their effects on startups can be as adverse as those of patent denials.