Financing Innovation: A Complex Nexus of Risk & Reward

Dutta, Sourish (2015): Financing Innovation: A Complex Nexus of Risk & Reward.

Abstract

The crucial and growing role performed by different financial intermediaries such as venture capitalists and angel investors as well as more traditional intermediaries such as commercial banks in developing entrepreneurial or innovative firms and boosting product market innovations has led to great research interest in the economics of innovation and entrepreneurial finance. Besides this, there are some important factors or developments which have affected the entrepreneurial finance in general as well as its influence upon different entrepreneurial or innovative firms. Indeed, it is also true that the financial and ownership structures of the different entrepreneurial firms and the legal as well as institutional environment, in which they operate, itself affects the product market innovations (Chemmanur and Fulghieri, 2014). .Therefore, in this paper I want to target a broad theme i.e. analysis of the mechanisms behind this scenario, especially, in the context of Indian market system.

• Item Type: MPRA Paper
• Language: English
• Keywords: Innovation, Financing Frictions, Entrepreneurial Finance
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D

References

Baumol, William J. (2004). The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Princeton University Press.

Brettel, Malte (2014). Entrepreneurial Finance. RWTH Aachen Entrepreneurship - Youtube.

Chemmanur, Thomas J. and Paolo Fulghieri (2014). “Entrepreneurial Finance and Innovation: An Introduction and Agenda for Future Research". In: The Review of Financial Studies 27.1.

Chemmanur, Thomas J, Karthik Krishnan, and Debarshi K Nandy (2011). "How does venture capital financing improve efficiency in private firms? A look beneath the surface". In: Review of Financial studies, hhr096.

Dicks, David and Paolo Fulghieri (2014). "Uncertainty and Innovation". In: It is a Preliminary and incomplete paper (November 19, 2014). It was presented in a conference on Entrepreneurship and Finance (December 4, 2014) at HKUST Jockey Club Institute for Advanced Study.

“Dictionary.com" (2015). In: url: http://dictionary.reference.com/browse/finance.

Dutta, Soumitra, Bruno Lanvin, and SachaWunsch-Vincent (2014). The Global Innovation Index 2014 - Human Factor in Innovation. url: https://www.globalinnovationindex. org/content.aspx?page=GII-Home.

Europe, United Nations Economic Commission for (2009). Policy Options and Instruments for Financing Innovation: A Practical Guide to Early-Stage Financing. Tech. rep. UNITED NATIONS, New York and Geneva.

Frontier Economics Ltd, London (2014). Rates of return to investment in science and innovation. Tech. rep. A Report Prepared for the Department for Business, Innovation and Skills (BIS).

Goldfarb, Brent et al. (2009). “Does angel participation matter? An analysis of early venture financing". In: Unpublished working paper.

Groh, Alexander, Heinrich Liechtenstein, and Karsten Lieser (2014). The Venture Capital and Private Equity Country Attractiveness Index - 2013 Annual. Tech.rep. IESE Business School, University of Navarra.

Groh, Alexander et al. (2014). The Venture Capital & Private Equity Country Attractiveness Index. url: http://blog.iese.edu/vcpeindex/.

Hall, Bronwyn H. (2002). “The Financing of Research and Development". In: Oxford Review of Economic Policy.

Hellman, Thomas and Manju Puri (2000). “The interaction between product market and financing strategy: The role of venture capital". In: Review of Financial Studies 13.4, pp. 959-984.

Jalonen, Harri (2012). "The Uncertainty of Innovation: A Systematic Review of the Literature". In: Journal of Management Research 4.1.

Jaruzelski, Barry, Volker Staack, and Brad Goehle (2014). Global Innovation 1000: Proven Paths to Innovation Success. Tech. rep. pwc and strategy&.

Kerr, William R, Josh Lerner, and Antoinette Schoar (2014). “The consequences of entrepreneurial finance: Evidence from angel financings". In: Review of Financial Studies 27.1, pp. 20-55.

Kerr, William R. and Ramana Nanda (2014). \Financing Innovation". In: NBER Working Paper Series. Working Paper No. 20676.

Kumar, Nirmalya and Phanish Puranam (2012). India Inside: The Emerging Innovation Challenge to the West. Harvard Business Review Press.

Lerner, Josh, Morten Sorensen, and Per Stromberg (2011). “Private equity and long run investment: The case of innovation". In: The Journal of Finance 66.2, pp. 445-477.

Mazzucato, Mariana (2013). \Financing innovation: creative destruction vs. destructive creation". In: Industrial and Corporate Change 22.4, 851-867.

Pearce, Bryan (2014). Adapting and evolving: Global venture capital insights and trends 2014. Tech. rep. Ernst & Young.

Popov, Alexander and Peter Roosenboom (2009). "Does private equity investment spur innovation? Evidence from Europe". In: ECB working paper.

Rajan, Thillai and Ankit Jain (2012). India Venture Capital and Private Equity Report 2012. Tech. rep. Department of Management Studies, Indian Institute of Technology Madras.

Sabarinathan, G. (2014). “Understanding Angel Investing in India - An ExploratorynStudy based on Publicly Available Data". In: Working Paper of Indian Institute of Management Bangalore No. 448.

Sahai, Pankaj (2009). Smooth Ride to Venture Capital. Vision Books.

Schumpeter, Joseph (1934). The Theory of Economic Development. Harvard University Press, Boston.

Sherman, Andrew J. (2012). Raising Capital. Third Edition. AMACOM.

Sheth, Arpan, Madhur Singhal, and Pankaj Taneja (2014). INDIA PRIVATE EQUITY REPORT 2014. Tech. rep. Bain & Company India Pvt. Ltd. and IVCA.

Tilburg, Rens van (2009). Finance for Innovation. Tech. rep. Dutch Advisory Council on Science and Technology Policy.

Wikipedia (2015). Entrepreneurial finance | Wikipedia, The Free Encyclopedia. [Online; accessed 14-Feb-2015]. url: http://en.wikipedia.org/wiki/Entrepreneurial_finance.