EXPRESS: Zooming in on the Very Early Days: The Role of Trademark Applications in the Acquisition of Venture Capital Seed Funding

Abstract

New ventures are essential for developing innovations and generating economic and societal value, but they depend on external resources, especially from venture capitalists, who provide seed funding to make necessary advances in the development and commercialization of their innovative products. From the marketing discipline’s perspective, the question is whether marketing actions play a role in this early acquisition of critical resources. Building on organizational legitimacy theory, we argue that trademark applications are important from day one, as they send important information cues to venture capitalists (e.g., on marketing-related professionalism) that foster the acquisition of venture capital (VC) seed funding. We build a dataset using Crunchbase and USPTO data that follows 5,370 ventures founded between 2007 and 2010 over several years up to 2018. We find that new ventures that file trademark applications have an increased likelihood of acquiring VC seed funding compared to firms that do not file trademark applications. This association is strongest during the first 100 days and diminishes about 1,000 days after foundation. The effect is particularly pronounced in industries characterized by low technological uncertainty and when new ventures do not operate from a location with a cluster of startups, such as Silicon Valley.