Financing SMEs and Innovation

Financing Risk and Innovation

Technological revolutions and waves of creative destruction are associated with new ventures and the destruction of mature firms, but also with the failure of numerous startups, suggesting a time of increased experimentation in the economy. We provide a model of investment into new ventures that demonstrates why some places, times and industries should be associated with a greater degree of exp...

Financing Innovation

We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highl...

Financing Risk and Innovation Waves∗

The great waves of innovation are often associated with investment in startup firms. The inherent uncertainty in these firms leads investors to stage investments which causes investors to face a unstudied type of risk. We introduce the importance of financing risk and show how it can both cause and amplify waves of innovation in the real economy. Financing risk occurs when investors with limite...

The Financing of Innovation

Evidence on the “funding gap” for innovation is surveyed. The focus is on financial market reasons for underinvestment in innovation 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&...

Financing Eco-innovation