I mentioned last week a paper by Jing Chen on serial small business owners. From the same special issue of the Journal of Economics & Management Strategy is another paper, "Show Me the Right Stuff: Signals for High-Tech Startups" by Annamaria Conti, Marie Thursby, and Frank T. Rothaermel (available online here [gated]).
The authors construct a theoretical model to examine the influence that (i) obtaining patents and (ii) receiving financing from founders, friends, and family (FFF) have on follow-on investments by angel capitalists and venture capitalists in high-tech startups. They then analyze data from 226 startups that went through the Advanced Technology Development Center at Georgia Tech (ATDC).
Conceptually speaking, patents and FFF investments serve as signals of quality to outside investors: willing to invest time and money in procuring a patent; willing to commit your own money and the money of close connections. What Conti, Thursby, and Rothaermal's analysis of the ATDC startups suggests is that angel investors and venture capitalists do not value these quality signals the same way: VCs put more weight on patents, while angels put more weight on FFF funding. That is, VCs appear to care more about the underlying quality of the startup's technology while angels care more about the commitment of the founders to the startup.
The implication for founders is that you should consider which signal to invest in depending on who you want to target for follow on funding; or if you have already invested in one versus the other, know which audience to target going forward. Both patents and FFF funding represent different costs and appear to have significantly different values to different types of investors.