Technology-driven selection of financial instruments

Financial markets in the past decade witnessed an enormous interest of IPO based financing of technology-based business. At the same time large sums of venture capital were provided to technology-oriented enterprises. In this article we review recent developments in the provision of equity for technology-based enterprises. After a brief introduction in the possibilities for financing enterprises, we take a look at the US and European financial markets. We discuss the extent to which these markets finance technology in particular rather than other sectors. We then take the perspective of the technology-based company. We discuss possible reasons for technology ventures to search for venture capital in the first place. We also investigate lessons that can be learned from technology investment in the past years. We conclude our analysis with a view one economic, technological and societal factors that underlie technology-driven selection of financial instruments.