- Elgar original reference
Edited by Mario Levis and Silvio Vismara
Chapter 6: The Canadian junior IPO market and the Capital Pool Company program
Entrepreneurial firms are an important engine of growth in most developed economies, and fostering the development of smaller growth firms is an important economic objective. To develop their businesses, entrepreneurs need access to capital, and the debt market is often difficult to access since young firms lack the cash flows and collateral required by lenders. Thus, until a firm has grown to a certain size the entrepreneur must rely on equity capital, which is also difficult to attract due to the high costs of information asymmetry and the agency costs that exist between the entrepreneurs, management, and investors. A substantial body of academic research documents the important role that venture capital (VC) and private equity (PE) investors play in financing entrepreneurial firms. Since these formal investors are specialized investors, they can alleviate the information gaps and costs that are prevalent in the private market. Specifically, VC and PE investors use their expertise to screen, advise, and monitor the entrepreneurial firms. However, only a small fraction of firms can attract VC and PE financing, and some firms might be averse to the strict oversight that accompanies such investment.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.