Financing innovative, high-growth ventures are difficult given their reliance on intangible knowledge-based assets, high probabilities of failure and asymmetries between entrepreneurs and financiers. Venture capitalists have developed systems over time to cope with this uncertainty and asymmetries in pursuit of high returns with other investors following suit. Unfortunately, returns on very early-stage investments to not seem to provide compensation for the commensurate risk taken and thus creative policy or industry-wide solutions are needed.
Sophie Manigart, Thomas Standaert and Tom Vanacker
Jürgen Hanssens, Marc Deloof and Tom Vanacker
Theories on the evolution of entrepreneurial financing align with firm maturity; as firms grow, different sources of finance become available. Hanssens, Deloof and Vanacker find, however, that several issues need to be addressed in order to get a full picture of entrepreneurial finance, including the unexpectedly important role of bank debt in early stage ventures, longitudinal evidence on the dynamics of financing policies and how multiple sources of finance relate and potentially interact.