Evidence on the “funding gap” for R&D is surveyed. The focus is on financial market reasons for underinvestment in R&D that persist even in the absence of externality-induced underinvestment. The conclusions are that 1) small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital; 2) evidence for high costs of R&D capital for ...

The purpose of this paper is to present the empirical findings of a recent qualitative study of the networks within which venture capital firms are embedded. The findings indicate that 60% of management buy-out managers’ time is focused on networking activities in order to procure MBO deals through their network contacts. In addition the grounded findings generated uncover the components of net...

BACKGROUND While venture funding has been applied to biotechnology and health in high-income countries, it is still nascent in these fields in developing countries, and particularly in Africa. Yet the need for implementing innovative solutions to health challenges is greatest in Africa, with its enormous burden of communicable disease. Issues such as risk, investment opportunities, return on in...

This paper sets out to analyze the modes of ‘venture learning’, which is defined as the process whereby knowledge is acquired on how to identify, develop and exploit business opportunities and the associated ventures. The context of learning discussed here is that of high technology ventures, and the ways in which certain types of venture relevant knowledge is acquired and transferred by ventur...

We develop a model of informed finance that explains the key qualitative and quantitative features of informed venture capital finance in the United States. We show that the two key features of our model— potential investors are better judges than entrepreneurs of a project’s economic viability and projects require both significant external funding and entrepreneurial inputs—give rise to under-...

In this paper, we analyze the investment and divestment patterns of different types of venture capitalists. Using a data set embracing all venture-backed IPOs that occurred on Germany’s Neuer Markt we investigate whether the governance structures, objectives, abilities and track records of different types of venture capitalists have a decisive influence on their behavior. Our main finding is th...