The Second Day Of The Residency Will Focus On Explaining Kno

The Second Day Of The Residency Will Focus On Explaining Knowledge On

The second day of the residency will focus on explaining knowledge on raising long-term capital from various sources of finance for entrepreneurial projects. The financial methods are generally tied to the firm’s life cycle. For example, start-up firms are often financed by angel investors, venture capital funds, debt, or a combination of these sources. As firms grow, they may seek to “Go Public” and raise funds through an initial public offering (IPO).

To better understand entrepreneurial finance, especially in the context of technological advancements, participants will seek peer-reviewed articles on crowdfunding, venture capital funds, or angel investments (excluding articles focusing on debt financial IPOs). They will review these articles and respond to the following questions:

  1. What corporate finance problem is the article addressing?
  2. What method of study (Qualitative, Quantitative, or mixed) does the author use?
  3. What are the significant findings or ideas of the study?
  4. What is the conclusion of the study? Does the finding support the conclusion?
  5. What are the strengths and limitations of the study?
  6. Propose future research directions for the topic that needs further investigation.

Everyone will have the opportunity to present their findings in front of the virtual class. The presentation should not exceed 30 minutes.

Paper For Above instruction

Understanding entrepreneurial finance is essential for guiding startups through critical phases of their development, especially when raising capital from various sources aligned with their growth stage. The article chosen for review explores the role of venture capital in addressing financing challenges faced by early-stage firms, particularly in relation to information asymmetry and risk management. This problem is central to entrepreneurial finance, where unique hurdles prevent startups from accessing traditional funding avenues.

The study employs a mixed-method approach, combining quantitative analysis of venture capital funding patterns with qualitative interviews of venture capitalists and entrepreneurs. This dual methodology allows for a comprehensive understanding of not only statistical funding trends but also the subjective experiences and strategic considerations influencing investment decisions.

The significant findings of the research reveal that venture capitalists predominantly address problems of information asymmetry and high risk through rigorous due diligence and staged funding. The study emphasizes that such practices reduce adverse selection and moral hazard, facilitating smoother capital infusion into innovative firms. Additionally, the research uncovers that the availability of venture capital correlates with technological sectors experiencing rapid growth, thus underscoring the importance of sector-specific dynamics in startup financing.

The conclusion asserts that venture capital plays a crucial role in mitigating entrepreneurial finance problems by providing not only capital but also strategic support, which enhances startup viability. The study's findings support this conclusion, demonstrating a clear link between venture capital engagement and successful startup scaling.

The strengths of the study include its comprehensive mixed-method approach and its focus on sector-specific funding patterns. However, limitations were noted, such as potential bias in interview responses and a limited geographic scope, which may affect the generalizability of the findings. Further research could explore how emerging financial technologies influence venture capital strategies or investigate the role of government-backed funding initiatives in supplementing private venture investments.

Future research could also examine the impact of global economic fluctuations on venture capital availability and startup growth, particularly beyond the technology sector. Investigating how startups in developing economies access venture capital and the barriers they encounter can provide valuable insights into expanding entrepreneurial finance globally.

References

  • Gompers, P., & Lerner, J. (2001). The Money of Invention: How Venture Capital Creates New Wealth. Harvard Business School Publishing.
  • Kaplan, S. N., & Strömberg, P. (2004). Characteristics, Contracts, and Actions: Evidence from Venture Capital. The Journal of Finance, 59(5), 2177-2210.
  • Lockett, A., Wright, M., & Franklin, G. (2005). Technology transfer, women entrepreneurs, and venture capital. Venture Capital, 7(2), 109-124.
  • Zeisberger, S., & Morschett, D. (2018). Crowdfunding and Angel Investment in Emerging Markets. Journal of Business Venturing Insights, 9, 14-22.
  • Bruton, G. D., Ahlstrom, D., & Li, H. L. (2010). Institutional theory and entrepreneurship: Where are we now and where are we going? Entrepreneurship Theory and Practice, 34(3), 421-440.
  • Agrawal, A., Catalini, C., & Goldfarb, A. (2015). Some simple economics of crowdfunding. Innovation Policy and the Economy, 16(1), 63-97.
  • Freeman, J., & Engel, J. S. (2007). The extension of organization science through a focus on entrepreneurial ventures. Organization Science, 18(1), 151-162.
  • Shane, S., & Cable, D. (2002). Network ties, reputation, and the financing of new ventures. Management Science, 48(3), 364-381.
  • Van Osnabrugge, M., & Robinson, R. J. (2000). Deal structuring and banking relationships in venture capital financing. Venture Capital, 2(2), 121-137.
  • Harrison, R. T., & Mason, C. M. (2007). Does the provision of finance facilitate growth in small firms? Journal of Small Business and Enterprise Development, 14(2), 227-243.

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