Author: Jean-Etienne de Bettignies Publisher: ISBN: Category : Languages : en Pages : 70
Book Description
This paper examines the interaction between venture risk, product market competition and entrepreneurs' choice between bank financing and venture capital (VC) financing. Under bank financing, a debt-type contract emerges as optimal, which allows the entrepreneur to retain full control of the venture and thus yields strong effort incentives, as long as she can service the debt repayment; but leads to liquidation in case of default, making the venture's success quite sensitive to exogenous, even temporary shocks that may hinder debt repayment. Under VC financing an equity-type contract emerges as optimal, which is not sensitive to exogenous shocks, but requires the entrepreneur to share a fraction of the rents with the financier, thus yielding lower effort incentives for the entrepreneur. There exists a threshold level of venture risk such that bank financing is optimal if and only if venture risk is below that threshold. Product market competition increases the value of stronger entrepreneurial incentives, and thus increases the maximum level of risk the entrepreneur is willing to take before switching from bank financing to VC financing. This is a robust result that is shown to hold in various models of competition, including Hotelling, Salop, Dixit-Stiglitz, Cournot-to-Bertrand switch.
Author: Tom Eisenmann Publisher: Currency ISBN: 0593137027 Category : Business & Economics Languages : en Pages : 370
Book Description
If you want your startup to succeed, you need to understand why startups fail. “Whether you’re a first-time founder or looking to bring innovation into a corporate environment, Why Startups Fail is essential reading.”—Eric Ries, founder and CEO, LTSE, and New York Times bestselling author of The Lean Startup and The Startup Way Why do startups fail? That question caught Harvard Business School professor Tom Eisenmann by surprise when he realized he couldn’t answer it. So he launched a multiyear research project to find out. In Why Startups Fail, Eisenmann reveals his findings: six distinct patterns that account for the vast majority of startup failures. • Bad Bedfellows. Startup success is thought to rest largely on the founder’s talents and instincts. But the wrong team, investors, or partners can sink a venture just as quickly. • False Starts. In following the oft-cited advice to “fail fast” and to “launch before you’re ready,” founders risk wasting time and capital on the wrong solutions. • False Promises. Success with early adopters can be misleading and give founders unwarranted confidence to expand. • Speed Traps. Despite the pressure to “get big fast,” hypergrowth can spell disaster for even the most promising ventures. • Help Wanted. Rapidly scaling startups need lots of capital and talent, but they can make mistakes that leave them suddenly in short supply of both. • Cascading Miracles. Silicon Valley exhorts entrepreneurs to dream big. But the bigger the vision, the more things that can go wrong. Drawing on fascinating stories of ventures that failed to fulfill their early promise—from a home-furnishings retailer to a concierge dog-walking service, from a dating app to the inventor of a sophisticated social robot, from a fashion brand to a startup deploying a vast network of charging stations for electric vehicles—Eisenmann offers frameworks for detecting when a venture is vulnerable to these patterns, along with a wealth of strategies and tactics for avoiding them. A must-read for founders at any stage of their entrepreneurial journey, Why Startups Fail is not merely a guide to preventing failure but also a roadmap charting the path to startup success.
Author: Cornelia Neff Publisher: Springer Science & Business Media ISBN: 3642556906 Category : Business & Economics Languages : en Pages : 230
Book Description
This book analyzes how corporate finance decisions influence strategic competition and innovation of firms in the product market. We consider bank loan financing and venture capital financing. Due to assymetric information, firms must sign special contracts with banks or venture capitalists. The financial contracts, in turn, determine the competitive strategies of firms in the product market. Firms compete in prices for market shares. In addition to that, firms invest in R&D in order to induce product or process innovation. We show that better access to financial resources improves a firm's market position and leads to a higher rate of innovation. Cash-rich firms may even decide to prey upon financially restricted rivals in order to prevent new market entry or to induce market exit.
Author: Thomas F. Hellmann Publisher: ISBN: Category : Languages : en Pages : 43
Book Description
Venture capital is widely believed to be an influential arrangement for the financing of new innovative companies. We examine and find empirical evidence that venture capital financing is related to product market strategies and outcomes of startups. We use a unique hand-collected database of Silicon Valley high technology start-ups, that contains both venture capital and non-venture capital backed firms, and that contains firm-specific data on initial product market strategies, subsequent financing patterns, and the time it takes a firm to bring its product to market. We find that firms that are pursuing an innovator strategy are significantly more likely and faster to obtain venture capital. The presence of a venture capitalist is also associated with a significant reduction in the time taken to bring a product to market, especially for innovators. Further, firms are more likely to list obtaining venture capital as a significant milestone in the lifecycle of the company as compared to other financing events. Our results suggest significant interrelations between investor type and product market dimensions, and a potential role of venture capital for innovative companies.
Author: Ruthann Quindlen Publisher: Warner Books (NY) ISBN: 0446526800 Category : Venture capital Languages : en Pages : 245
Book Description
"The woman who was an early champion of Microsoft and America Online, Ruthann Quindlen, unveils the names and faces, the deals and the dollars, and the vital role of venture capital in creating companies, jobs, and wealth for the 21st century." "Where do you fit in? Confessions of a Venture Capitalist helps you bypass the most common errors made by start-up entrepreneurs. And it provides everyone, businesspersons and casual readers alike, with an intimate, front-row understanding of how the venture capital economy and Silicon Valley are radically changing the world we all inhabit."--BOOK JACKET.Title Summary field provided by Blackwell North America, Inc. All Rights Reserved
Author: Heli A. Koski Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
The competitive effects of acquisitions made by large US-based technology companies have come under increased regulatory scrutiny over recent years because their acquisition patterns have been viewed as potentially harming competition. This paper studies the impact of acquisitions by large US-based technology companies on the entry dynamics and venture capital financing in their target product markets. We use data from Crunchbase, a start-up directory listing more than 700,000 start-up companies from 742 product markets globally, distinguishing the US and European markets for 2003-2018. Our difference-in-differences estimation results suggest that the technology giants' buyouts subsequently reduced market entry rates and decreased the available venture capital funding in the product markets of the acquired companies. The acquisitions of technology giants seem to generate a so-called “kill zone,” which dissuades the market entry of new companies. The kill zone effect is intense and evident in the product markets close to the data giants' core business areas, where the technology companies have the best prospects of exploiting their existing (consumer) data and competence. We do not find any short-term decline in the market entry or venture capital finance after the data giants' first acquisitions in unconnected markets. In these markets, though, the data giants seem to build up entry barriers in the longer run through their acquisitions. These findings highlight the negative long-term consequences of the tech giants' increased market power through their acquisition behavior in relation to firm entry, competition, and innovation in technology-intensive markets.
Author: Holger Ludewig Publisher: diplom.de ISBN: 383241214X Category : Business & Economics Languages : en Pages : 192
Book Description
Inhaltsangabe:Abstract: In recent years the issue of early stage investment in new technology based firms has drawn considerable attention. Its relevance emerges from the rise of high technology industries in the global economy. As competition in established, mature industries all over the world is ever increasing, the importance of keeping up and increasing the speed of innovation to ensure competitiveness of companies and national wealth is widely recognized. Innovation may concern products or processes. It refers to the development of new proprietary knowledge, i. e. technology, which is embodied in marketable products or services. In as far as the added private knowledge increases the utility of a product to the customers, it adds value. Unless the new features of a product are matched by competitors, a company may earn innovation rents. Thus proprietary knowledge attained through innovation is an important source of strategic advantage. In a competitive, dynamic market, however innovation rents are not sustainable. Competitors will attempt to match and exceed the innovation advantage. This may be achieved by imitation or by adding other or more innovative features. Whereas following the product life cycle model initial growth may be steep and rents may be high for the first mover, imitators competing on price and other rivals competing on innovations, may inflate the monopolistic power of the proprietary knowledge. Striving to maintain and increase market shares and profitability, companies thus have a strong incentive to keep innovating. For new technology-based firms the importance of proprietary knowledge is particularly pronounced. These start-ups operate in a hostile competitive environment, characterized by high uncertainty, offering the potential for rapid growth and high profits on the upside, but also the substantial threat of incurring deep losses on the downside. Whereas large companies generally possess a diversified product portfolio and a host of strategic assets, small companies will need to compete on a single new product or service and the determination of its management team. Politicians, worried by high unemployment and budget deficits, lately fell in love with the high-technology start-ups for their ability to create jobs and ensure future tax revenues. New technology-based firms are drivers of structural change in the economy in that they are among the first to enter new high growth potential industries. For [...]
Author: Geoffrey Gregson Publisher: Business Expert Press ISBN: 1606494732 Category : Business & Economics Languages : en Pages : 263
Book Description
Many business ventures today are looking to attract external financing, with an emphasis on business angel investment. Inside this text, the author incorporates the views of business angels, venture capitalists, entrepreneurs, and legal advisors; and draws upon the latest academic thinking on financing new ventures, providing comparisons between business angel and venture capital investing to further inform the reader. The concepts, principles, and guidelines presented can help you and any entrepreneur, business support agency, business student, and others interested in raising external investment and in developing an “investable” business. The book is organized into seven chapters covering: • Fundamental concepts of entrepreneurial venturing and entrepreneurial finance • Market conditions from which investable businesses emerge • The investment process • Deal negotiations • The post-investment relationship between entrepreneur and investor • Recent trends affecting how entrepreneurs raise finance that include strategic exits, “super angels,” and the emergence of “crowdfunding”
Author: Frederic Delmar Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Considering significant reasons why some newventures are more likely than others to receive capital from external sources,it isargued that new venture finance follows a pattern of multistage selection over time. Using a sample of the life stories of 221 of new Swedish ventures in 1998, the venture financing process is analyzed from the perspectives of the business founder and of the financier. Founders seek external funding based on their perceptions about business opportunity, including anticipated market growth, market competition,employment growth, and price competitiveness. Financiers, on the other hand, make their funding decisions based on objective verifiable indicators of venture development. Other control covariates of the study include start-up experience, industry experience, completed business plan, venture age, industry sales growth, number of firms in an industry, and average firm age in theindustry. The study offers several contributions by: (1) indicating that the financingof new ventures follows an evolutionary selection process; (2) examining empirically the role of founders in the process of new venture finance; (3) providing evidence about new venture finance that can be generalized to thetypical new venture; and (4) overcoming the problems of selection bias. (CBS).
Author: Jean-Etienne de Bettignies
Author: Tom Eisenmann
Author: Cornelia Neff
Author: Thomas F. Hellmann
Author: Ruthann Quindlen
Author: Heli A. Koski
Author: Holger Ludewig
Author: Adolf Augustus Berle
Author: Geoffrey Gregson
Author: Frederic Delmar