Venture Predation (2023)
The 2023 paper "Venture Predation" examines how venture capital-backed startups use below-cost pricing and aggressive spending to drive out competitors, then raise prices. The authors argue this strategy can harm innovation and consumer welfare, and propose antitrust interventions to curb such predatory behavior funded by venture capital.
Background
- This is a 2023 academic paper by law professors Joshua Mitts (Columbia) and Erik Gordon (Michigan) arguing that some venture capital firms use "predatory" tactics to harm startups they don't back.
- The core claim: VCs sometimes pressure portfolio companies to file patent lawsuits against rival startups (especially in pharma/biotech), using litigation as a weapon to weaken or destroy those rivals — not to win valid claims.
- The paper builds on an earlier Mitts paper (2020) that found VC-backed startups file patent suits disproportionately against other VC-backed startups, often around fundraising rounds.
- "Venture predation" reframes certain VC litigation as a form of anticompetitive behavior, distinct from ordinary patent enforcement. The paper has been cited in policy debates about startup competition and VC power, but also criticized for relying on statistical correlations rather than direct evidence of intent.