The “shelf life” of patent signals: Empirical research on startup financing in Japan

• Integrated patent and funding data to open a new path for Japanese startup research. • Patents boost early funding; effect fades over time. Endogeneity is addressed. • Offers insights into Japan’s startup financing, aiding growth in a lagging ecosystem. This study empirically analyzed how patents affect fundraising for Japanese startup companies. This study constructed a database to determine whether Japanese startups secure higher funding amounts by holding patents (H1) and whether the effect of patents is higher in earlier funding rounds (H2). The results showed that patent ownership and the number of patents significantly increased the total amount of funds raised, supporting H1. Furthermore, the positive impact of patent count on funding amount was particularly pronounced in the early rounds and diminished as rounds progressed, supporting H2. This outcome suggests that the signaling effect of patents has a “shelf life,” with patents being particularly important in the early stages. JEL Codes: G12, G14, G32