Patents Critical Indicator of Success
Another study shows that start-up company success is tied to patenting success. The authors of the study are a pair of professors of finance, Jerry Cao of Singapore Management University and Po-Hsuan Hsu of University of Connecticut. Perhaps the key finding is:
Start-up firms that successfully file patents before receiving any VC investment and more likely to complete IPOs and less likely to fail or be acquired.
The study shows that
67.39% of patenting VC investees successfully completed the IPO process, whereas only 14.81% of VC investees without patents did do.
This is a huge difference. Patents are also a good indicator of whether a firm will end up in bankruptcy.
On the other hand, only 3.47% or patent-filing VC investees filed bankruptcy, in sharp contrast to the 10.12% of VC investees without patents who did so.
This study clearly shows that patents are critical to the success of start-up companies.
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About
This blog is devoted to intellectual property innovation, patent law and innovation. The moderator, editor, and main 
author is Dale B. Halling. Mr. Halling is patent attorney and entrepreneur. As a patent attorney, Mr. Halling, has represented numerous Fortune 500 companies including, McDonnell Douglas, Boeing, Motorola, Ameritech, SBC, MCI, Cypress, and numerous technology start-ups. He has helped his clients obtain patents worldwide. Mr. Halling has a BS in Electrical Engineering from Kansas State University, an MS in Physics from the University of Texas at Dallas and a JD from St. Louis University. Mr. Halling is the author of the book “The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.”
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