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FOREWORD There has been increasing concern from policy makers around the world about the lack of access to finance for young innovative firms. As a result, governments in many OECD countries have sought to address the financing gap and perceived market failures by supporting the seed and early stage market. This paper seeks to summarise the lessons...
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... Financing strategy is a crucial factor of success for innovative businesses (Wilson (2015) [1]). It is not surprising that these firms use a variety of different strategies to fund their projects including private equity, business incubators, venture capital finance, angel finance, seed accelerators, crowdfunding and most recently initial coin offerings (ICOs) and initial exchange offerings (IEOs). ...
... Financing strategy is a crucial factor of success for innovative businesses (Wilson (2015) [1]). It is not surprising that these firms use a variety of different strategies to fund their projects including private equity, business incubators, venture capital finance, angel finance, seed accelerators, crowdfunding and most recently initial coin offerings (ICOs) and initial exchange offerings (IEOs). ...
... Without moral hazard and absence of promoting effect of listing, there are two cases: (1) if v ≤ I/n 1 + c, the project is worthless for the entrepreneur; (2) otherwise the firm is indifferent between ICO and IEO. ...
This paper analyzes a financing problem for an innovative firm that is considering launching a web-based platform. The model developed in the paper is the first one that analyzes an entrepreneur’s choice between initial exchange offering (IEO) and initial coin offering (ICO). Compared to ICO, under IEO the firm is subject to screening by an exchange that reduces the risk of investment in tokens; also the firm receives access to a larger set of potential investors; finally tokens become listed on an exchange faster. The paper argues that IEO is a better option for the firm if: (1) the investment size is relatively large; (2) the extent of moral hazard problems faced by the firm is relatively large; (3) the degree of investors’ impatience is relatively small. Furthermore, a non-linear relationship between firm quality and its financing choice is found. Most of these predictions are new and have not been tested so far.
... Financing is crucial for entrepreneurial firms and innovative firms, as well as for small-and medium-sized businesses (see, for example , Hall 2009;Wilson 2015;Nicolò 2015;Capizzi and Carluccio 2016;Ceptureanu et al. 2017). Crowdfunding in its modern form (performed online) and token issues are the latest topics in this area. ...
Entrepreneurial, innovative and small- and medium-sized firms experience difficulties with raising funds using traditional debt and equity. Consequently, they are constantly looking for new strategies of financing. The latest inventions are crowdfunding and token issues. In contrast to traditional ways of raising funds these innovations: (1) use modern technology (online transactions, blockchain, etc.) much more actively; (2) are usually quicker in reaching potential investors/funders; (3) use more active network benefits such as, for example, a large number of interactions between investors/funders and between funders and firms. These changes are so significant that some experts list them among the top business inventions of the 21st century. This article provides a review of the growing number of theoretical papers in the areas of crowdfunding and token issues, compares their findings with empirical evidence and discusses directions for future research. The research shows that a large gap exists between the theoretical literature and empirical literature.
... The recognized importance of sustainability-related topics has produced studies about the efficiency of public policies, private industrial performance, and environmental performance determinants [57]. In addition, several International Organizations, such as the European Union (European Commission, 2017) and the OECD, [58] have introduced ecological issues into their programs and goals. In the wine industry, the International Organization of Wine (OIV) has been involved in sustainability since 2014. ...
The aim of this paper is based on understanding how sustainability-oriented transition occurs in clusters. This study focuses on both drivers and actors of that transition. Empirical results based on induction, using mixed-methods on the Serra Gaucha wine cluster in the South of Brazil, suggest that, at the micro-level, the mobility and adoption of knowledge about sustainability and individual awareness will support sustainability-oriented strategies as a new source of competitive advantage. Then, at the meso-level, collective actors’ efforts towards sustainability in the cluster legitimize, disseminate and facilitate the adoption of new sustainable-oriented practices, creating a new cluster sub-identity (sustainability) compatible with the existing one. These actors utilize leading local firms in order to disseminate new practices and signal change in the territory. Lastly, macro-level governmental regulations, market pressures, and other environmental changes facilitate that clusters develop a collective-minded strategy towards sustainability.
... The start-up ecosystem is completed by non-equity financing investorssuch as banks, government and regional development agenciesand by other actors providing expert services to both entrepreneurs and investors, such as business advisors, lawyers, investment banks, gatekeepers, foundations and non-profit organizations, governments, universities and research centres (Busenitz et al. 2003;Isenberg 2010;OECD 2011;Wilson 2015). ...
The last decade has seen the emergence of alternative sources of early-stage finance, which are radically changing and reshaping the start-up eco-system. These include incubators, accelerators, science and technology parks, university-affiliated seed funds, corporate seed funds, business angels – including “super-angels”, angel groups, business angel networks and angel investment funds – and both equity- and debt-based crowdfunding platforms. In parallel with this development, large financial institutions that have traditionally invested in late-stage and mature companies, have increasingly diversified their investment portfolios to “get into the venture game”, in some cases, through the traditional closed-end funds model and, in other cases through direct investments and co-investments alongside the closed-end funds. This paper reviews the main features, investment policies and risk-return profiles of the institutional and informal investors operating in the very early stage of the life cycle of entrepreneurial firms. It concludes that traditional closed-end venture capital funds continue to play an important role in early stage finance because of their unique competences (e.g. screening, negotiating and monitoring) in what has become a wider and more complex financing ecosystem.
... However, their benefits always have to be weighed against the costs of government intervention, especially the risks of government failures. In the European context, additional complicating factors are the fragmented national borders, disparate legal systems, cultural disparity regarding risk taking, and the risk of double taxation (Wilson 2015;Tykvová et al. 2012). ...
(1) Background: Cross-border venture capital (VC) investments play an important role in the scaling up of high-growth companies. However, policymakers worry that foreign VC investments transfer the majority of economic activity to the investor country. On the one hand, start-ups welcome the foreign capital, expertise, and networks that accompany cross-border investments. On the other hand, policymakers are concerned that cross-border investments predominantly benefit foreign economies and fail to develop the local entrepreneurial ecosystem. This paper describes a framework for how policymakers can develop a set of policies toward cross-border VC investments. (2) Methods: The paper examines available data and trends about the role of cross-border investing, focusing on Europe, Israel, and Canada. Then, the paper explains the underlying economic challenges and develops a policy framework. (3) Results: The analysis shows that in addition to policies that aim to attract foreign investors, there are also important policies for the development of the domestic VC market. The analysis encompasses policies that are both financial and non-financial in nature. (4) Conclusions: A core insight for policymakers is to retain a balance of initiatives, attracting foreign investors while simultaneously making sure to strengthen the country’s domestic VC industry and innovation ecosystem. The mix of policies will adjust as the domestic ecosystem matures.
... The 2007-2009 financial crisis severely affected terms and conditions of European SMEs and startups' funding (Cosh et al., 2009;Brown and Earle, 2017), by forcing them to use lending channels different from the traditional banking channels, such as venture capital, business angels, and more recently, crowdfunding. Several Member States have introduced or are considering tax incentives to encourage investment through crowdfunding and provide investors with a counterweight to the risks associated with it (Wilson, 2015). Some countries (i.e., Italy) have adopted existing schemes by extending them to the new form of investments while other countries have put in place new tailored schemes (i.e., the UK, France, and Belgium). ...
Some European countries offer tax incentive schemes to investors and companies in crowdfunding. On one hand, they could be seen as a tool to reduce the system’s dependence on banks and increase the availability of credit for start-ups and Small and Medium Enterprises (SMEs). On the other hand, there is the counterweight of disadvantages that investors may face by investing in crowdfunding (i.e. complex and incomplete laws, and weak protection). This paper is primarily intended as a primer on the use of tax incentives for crowdfunding in Europe. In this study, we first examine the implementation of tax incentive schemes in the United Kingdom, France, Italy, Spain, and Belgium. Then, we analyse and compare the characteristics of such schemes along three dimensions: the incentives structure; the business characteristics; and the type of investor. We find that tax incentive schemes for crowdfunding vary widely in their form and other features of their design. Moreover, the most used forms of tax incentives are those that provide for an up-front tax credit on the amount invested in early-stage ventures. These incentives have an immediate effect on the annual income tax of the investor. A central implication is that the more tax incentive schemes are properly designed and tailored for crowdfunders, the more investors, start-ups and other firms with low liquidity could use crowdfunding as a source of funding.
... The available literature demonstrates that scholars have been dealing with CSF prioritisation issues, although somewhat less in the field of innovation policy mixes. The examined theoretical background revealed a number of research projects accordingly, with several of them being primarily focused on CSF identification and selection (Komninos & Tsamis, 2008;Osei-Kyei & Chan, 2015;Wilson, 2015). Due to the lack of a perfectly matching methodology at our disposal, a tailored empirical and analytical methodology approach was constructed to meet the purpose of this research. ...
The paper investigates the national innovation system
and divergences in the prioritisation of key measures
of the national institutional framework linked to the policy
mix supply side. Two acting populations from the
Republic of Croatia were selected for this process:
on one side, 33 governmental representatives of the
institutional framework (IF) ecosystem, and the "opposite
side" of 93 owners or CEOs of firms as policy
targets or beneficiaries. The produced results were
additionally verified through 18 semi-structured
interviews with government officials as representatives
of the IF. The results confirm the existence of divergences
in the perception of importance and relevance of the
policy measures between the two populations.
... Policy makers have sought to address this by supporting the seed and early stage financing (K. Wilson, 2015) and are now beginning to recognize the existence of a second "valley of death", referring to the second equity gap emerging beyond the initial revenue generating phase and affecting somewhat older and larger firms (N. Wilson et al., 2018). ...
We aim to assess the impact of acquisitions on growth of European high-tech entrepreneurial firms. The paper explores whether firms acquired by a corporate investor enjoy higher growth than their non-acquired counterparts and whether the effect on target firm growth differs between foreign and domestic acquirers. It also explores whether firms acquired by a corporate investor outperform those acquired by a financial investor. Using a propensity-score matching approach and difference-in-differences regression, we estimate the effect of acquisitions on the cumulative growth of revenue and employment from the year before the acquisition to up to 5 years after, for a sample of 4714 acquisition targets from 5 EU countries between 2003 and 2015. Our results show that acquisitions have a positive effect on growth of high-tech entrepreneurial firms and that growth is not significantly different between firms acquired by an established company and those acquired by a financial buyer. The nationality of the acquirer does matter, however. Foreign-owned firms exhibit significantly higher cumulative revenue and employment growth than the ones with domestic acquirers.
... The recognized importance of sustainability-related topics has produced studies about the efficiency of public policies, private industrial performance and the determinants of environmental performance (Almer and Winkler, 2017). Several International Organizations have introduced environmental issues into their programmes and goals, such as the European Union (European Commission, 2017) and the OECD (Wilson, 2015). According to Schoenefeld et al. (2016), the necessity of monitoring progress towards sustainability has led policymakers to recognize the difficulties of creating complete evaluation instruments. ...
... Indirect public participation in financing the VC market means that the government increases the capital of funds set-up by independent private fund managers. Currently, this indirect form of public VC market involvement dominates (Wilson 2015;Wilson and Silva 2013) and is the form that is used when funds are provided by the EU. Indirect public participation could be implemented using several sub-techniques. ...
The venture capital (VC) sector in central and eastern Europe (CEE) is characterised by the dominance of public resources. This is mainly due to a new type of equity scheme introduced in the European Union’s 2007–2013 programming period. The paper examines how successful the CEE EU member states, with a relatively less developed VC industry, were in using government equity schemes based on market cooperation between public and private market actors. It provides a general overview of the VC programmes launched in the CEE region viewed through the lens of academic design theories. The paper concludes that government VC programmes in the region are characterised by short time frames, administrative requirements which restricted investors, small fund sizes preventing efficient operation and limited participation of institutional investors. Compared to developed countries agency problems were much more pronounced. The limited number of business angels and incubator organisations, the high number of underfinanced promising start-ups and the misuse of government connections meant that the use of predominantly hybrid funds’ forms of government VC programmes were more challenging in the CEE region compared to western Europe. However, the greatest risk of public equity schemes – the crowding out effect on private investors – is absent in the CEE region because of the lack of private investors.
