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on Entrepreneurship |
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Issue of 2006‒04‒08
four papers chosen by Marcus Dejardin Facultes Universitaires Notre-Dame de la Paix |
| By: | Joachim Wagner (Institute of Economics, University of Lüneburg) |
| Abstract: | Based on data from a recent representative survey of the adult population in Germany this paper documents that the patterns of variables influencing nascent and infant entrepreneurship are quite similar and broadly in line with our theoretical priors – both types of entrepreneurship are fostered by the width of experience and a role model in the family, and hindered by risk aversion, while being male is a supporting factor. Results of this study using cross section data are in line with conclusions from longitudinal studies for other countries finding that between one in two and one in three nascent entrepreneurs become infant entrepreneurs, and that observed individual characteristics – with the important exception of former experience as an employee in the industry of the new venture - tend to play a minor role only in differentiating who starts and who gives up. |
| Keywords: | Nascent entrepreneurs, infant entrepreneurs, Germany |
| JEL: | J23 |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:1&r=ent |
| By: | Joachim Wagner (Institute of Economics, University of Lüneburg) |
| Abstract: | Using a large recent representative sample of the adult German population this paper demonstrates that nascent necessity and nascent opportunity entrepreneurs are different with respect to some of the characteristics and attitudes considered to be important for becoming a nascent entrepreneur, and that they behave differently. Given the lack of longitudinal data, however, we have no information about the performance of entrepreneurs from both groups in the longer run. |
| Keywords: | Necessity entrepreneurship, opportunity entrepreneurship, Germany, REM |
| JEL: | J23 |
| Date: | 2005–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:10&r=ent |
| By: | Baeyens,K.; Manigart,S.; |
| Abstract: | We study the financing strategies of 191 start-ups after they have received venture capital (VC) and thereby contribute to the staging literature. The VC backed start-ups have raised financing on 345 occasions over a five-year period after the initial VC investment. Surprisingly, bank debt is the most important source of funding for these young and growth-oriented companies, supporting the view that VC investors have a certifying role in their portfolio companies. Bank debt is available to firms with a lower demand for money, lower levels of risk and of information asymmetries, implying that staging of equity funding is less important for these firms. A firm only raises equity when it’s debt capacity is exhausted, hinting that equity investors are investors of last resort. New equity is provided by the existing shareholders in 70% of the equity issues, supporting earlier findings that staged financing is important in venture capital financing. New shareholders invest when large amounts of funding are required and when risk and information asymmetries are high. We interpret these findings as support for the extended pecking order theory. In line with syndication arguments, new investors thus provide risk sharing opportunities and skills to screen and monitor and thereby reduce information asymmetries. New equity investors face adverse selection problems, however, in that only the most risky investments are syndicated. |
| Keywords: | financing strategy, venture capital, bank debt, external shareholders |
| JEL: | G32 |
| Date: | 2006–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2006-05&r=ent |
| By: | Gebhardt, Georg; Schmidt, Klaus M. |
| Abstract: | When a young entrepreneurial firm matures, it is often necessary to replace the founding entrepreneur by a professional manager. This replacement decision can be affected by the private benefits of control enjoyed by the entrepreneur which gives rise to a conflict of interest between the entrepreneur and the venture capitalist. We show that a combination of convertible securities and contingent control rights can be used to resolve this conflict efficiently. This contractual arrangement is frequently observed in venture capital finance. |
| JEL: | G32 G24 D23 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:909&r=ent |