Edited by Dawn R. DeTienne and Karl Wennberg
Chapter 4: Survey on venture capital financing exit stage
New business creation is shown to be a potent force for economic development and productivity improvement (Aghion and Howitt, 2006; Aghion et al., 2004). However, entrepreneurial ideas and product development require substantial capital during their seminal stages. Banks are an important source of financing for a subset of new businesses firms, but the majority of young firms remain unlikely to receive significant bank loans because they have substantial intangible assets, they are associated with significant ex ante uncertainty and they are still producing operating losses that make it impossible for them to assure interest payment on debt obligations (Ueda, 2004). Furthermore, young entrepreneurial firms need, in addition to capital, substantial competences to transform their ideas into a mature business. The specificity of venture capital (VC) is its ability to bridge these competence gaps and to finance the high-risk and potentially high-reward ventures (Sahlman, 1990; Hellmann and Puri, 2000, 2002; Brander et al., 2002).
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.