The sovereign debt crisis hits heavily European economy. Policymakers are desperately searching for solutions. But resolving the crisis would be much harder if the economies continue to stall or shrink. The key driver for modern economic growth is entrepreneurial innovation (Schumpeter, 1911, 1934; Romer, 1990; Grossman and Helpman, 2002; and Aghion and Howitt, 1992, 1998). Innovation requires constant investments in entrepreneurial firms. Entrepreneurial financing, however, is too risky and too costly for traditional prudent investors. Financial problems are particularly acute in high-growth entrepreneurial firms due to their inherent uncertainty (Hall, 2002). The Community Innovation Survey (2002) reports that the lack of appropriate sources of finance and the high costs of innovation are the most cited hampering factors in European companies. The financial constrains force almost one out of three innovative or potentially innovative Dutch firms to abandon or to slow down their innovative projects (Mohnen, Palm, van Der Loeff, and Tiwart, 2008). Savignac (2006) also finds that 17.25 percent of innovative firms are financially constrained in France.
The Venture Capital (VC) market provides the unique link between financial surplus and innovation, and mitigates the problem of under-investment in innovative activities by small and new firms (Hall, 2002). The structure of VC firms seems to be designed specifically to light fires under scrappy and ambitions startups, to materialize new business ideas and to maximize return on investment in true innovation projects (Stuck and Weingarten, 2005).
There are both ad hoc and academic evidence suggesting that VC boosts American innovation, for example, NVCA (2010), Hellmann and Puri (2000), Kortum and Lerner (2001), and Ueda and Hirukawa (2003). The empirical finding in Europe, however, is not unanimous. On the one hand, Tykvova (2000) finds that VC investments have a highly significant positive effect on patenting activity in Germany. Engel and Keilbach (2002) reveal that the average number of patents in the German VC-backed group is weakly higher than in the control group. Bertoni et al. (2009) report that VC investments promote Italian firms’ patenting activity. And Colombo et al. (2009a) find that VC investments have a positive impact on the productivity of 222 Italian firms operating in high-tech manufacturing and services. On the other hand, Peneder (2010) finds that the Austrian VCs have a positive impact on firm growth, yet not on innovation output. Pinch and Sunley (2009) find that there is little evidence that the British VCs promote the innovation performance of their investees.
In conclusion, policy makers and practitioners often try to assist in the formation of new firms but do not always succeed. Many firms fail despite all the assistance however the important factor is that the government continues to promote their creation so that new jobs and industries can be created. (Storey 1994) Both policy makers and practitioners need to ensure a level playing field so that the economy can grow, develop and compete with other economies around the world.
...se enough money during a certain period of time the inventors get start their proposed project.
Knowing what your startup is worth can be one of the hardest things as a startup founder. But the real problem is not necessarily finding the right valuation method, but avoiding too low or too high valuation. What are the big problems in missing the Goldilocks Principle and not finding the golden middle ground?
Entrepreneurs are people with lot of qualities such as creativity, the ability to keep going in the face of hardship and social skills needed to build teams. (Mindtools.com, 2014) They have the abil...
The case study is about an interview, conducted to four venture capitalists from four of the most prominent VC Silicon Valley firms, Kleiner Perkins Caufield & Byers (KPCB), Menlo Ventures, Trinity Ventures and Alta Partners. These firms invest both in seed as well as in later-stage companies, which operate mostly in the information technology sector. However, each VC has developed different sector portfolio depending on the expertise of the venture capitalists, the partner network and other factors. Professor Mike Roberts and Lauren Barley a senior research associate, both from Harvard Business School, have made a series of seven questions to their interviewees to understand how they evaluate potential venture opportunities and what they look at in order to decide if they will fund them and in which way. The questions were dealing with how VC’s evaluate potential venture opportunities, how they conduct due diligence, what process id followed for the decision making, what financial analyses is performed, the role of risk in the evaluation and how they think of potential exit routes. These questions were asked individually and revealed several similarities as well as differences in the strategy and the criteria that are used for the evaluation.
Adelman, P. J., & Marks, A. M. (2010). Entrepreneurial finance. (5 ed.). Bedford, Texas: Prentice Hall.
In particular, startups conform to a set of formalized, ritualistic practices in order to obtain venture capital (VC) funding during the “seed” phase. Almost paradoxically, new companies are regarded as a kernel of innovation and invention in the economy and yet they seem to emulate each others’ routines in the pursuit of early investment, decoupled from the actual products or services they plan to sell to the
A venture champion is someone within an organization who identifies the opportunity for a new venture, raises the financing necessary to support the venture, and manages the development and growth of the business. Venture champion is also a term used to depict new technology based firms (NTBFs) that create some of these major innovations. Some of the factors that influence the decision to establish a new venture include their ability to: when assessing failed ventures being able to distinguish between bad luck and bad decisions; measure progress against predetermined milestones, and if necessary redirect; get out when necessary; learn from successes as well as failures; be aware of the possibility of strategic reversal and perceived competition
Crowdfunding provides a hope to individuals who are looking for investments for innovative ideas and also for both current and future technologies. Crowdfunding isn't reinventing the wheel regarding raising support. Rather it utilizes cutting edge innovation to make raising support more effective. This evolutionary methodology of capital portion takes after the same sort of authe...
requires a precise mix of intellectual and technical resources. Seed is the first stage of venture capital
It can be concluded that entrepreneurship cannot exist in the absence of innovation. Innovative entrepreneurship is the key to a successful business leading to economic development. Entrepreneurs are very prominent figures of society and therefore their actions and decisions have a significant impact on the welfare of stakeholder groups. Sustainability plays a vital role in this relationship in that it provides a solid foundation upon which a business can expand with more temerity and assuredness.
Throughout Europe, great attention has been paid to the small business area and to the contribution that entrepreneurial small businesses can bring beneficial to transforming the economy (EiM, 1994).The concept of entrepreneurship is often considered with new venture creation and small enterprise management, and the terms of owner-manager and self-employment (Gibb, 1996). While Kirby (2003) has argued that entrepreneurship is far broader than these concepts mentioned above. Not all owner-managers can be considered as entrepreneurs, nor are all small business entrepreneurial (Carland et al., 1984). Carland also has argued that entrepreneurial small business is aiming at profitability and growth, and the business is regarded to be innovative.
Entrepreneurship is an important aspect of social, economic and community life. It can be viewed as a critical factor to economic growth as well as a way of addressing unemployment (Nolan, 2003).Entrepreneurs are people who are persistently focused on identifying opportunities, they seek to create something worthwhile while taking into account foreseeable risk and rewards associated with the efforts (Nolan, 2003). Furthermore, entrepreneurs are frequently understood to be individuals who discover market needs and establish new business to meet those identified opportunities. The following assignment will firstly discuss the types of entrepreneurship, secondly it will discuss the reasons people become entrepreneurs, and thirdly it will discuss the importance of entrepreneurship.
Literature surrounding the topic of entrepreneurship, innovation and cosmopolitanism, indeed has been widely discussed, often have the subtopics been referred as a separate entity to a common subtopic. Whilst this ignores the opportunity for each of the subheadings to be associated, the body of literature clearly supports the existence of entrepreneurship, innovation and cosmopolitanism yet rarely does literature address the association between innovation and entrepreneurship in a cosmopolitan society under a common typology. Rather, entrepreneurship, innovation and cosmopolitanism are treated as separate entities to the same subtopic. This paradigm of correlating the indifferences depends on what or how the terms are associated. In order to narrow the widely apprehendable literature on the common terms, the central theme is one whereby all the headings are grouped and reviewed in terms of the associating factors between innovation and entrepreneurship in a cosmopolitan society. A systematic interpretation of the literature is essential to interpret the board and widely discussed literature at hand.. It is well understood that entrepreneurship and innovation amongst societies is are not new phenomenon’s, however in the contemporary cosmopolitan emergence of the modern world, how all three terms can be perceived requires a closer examination of how the terms can be interpreted and accompanied. Finally, all three terms can be measured in both micro and macro dynamics depending on how the literature is examined, in attempt to keep the topic balanced this paper reviews both the macro (society) and micro (businesses) innovation and entrepreneurship in cosmopolitanism.
Innovation in business is a key aspect of staying viable in an ever changing climate of competition. One must continuously provide insight and solutions to issues, known and presently unknown through investigation and collaboration. Within this paper we will look into four businesses and their use of innovation in attempt at a better business or greater market share. The innovative businesses of interest are: Taco Bell, Zipcar, Dollar Shave Club and Kickstarter.