IDEAS home Printed from https://ideas.repec.org/a/eee/corfin/v50y2018icp538-555.html
   My bibliography  Save this article

Entrepreneurial finance: Unifying themes and future directions

Author

Listed:
  • Cumming, Douglas
  • Groh, Alexander Peter

Abstract

We overview the papers of this special issue of the Journal of Corporate Finance and explain how they fit within the different segments of the entrepreneurial finance literature, including equity crowdfunding, angel investors, debt, venture capital, and private equity. We point to the growing importance of different sources of capital for entrepreneurs and emerging research trends pertinent to academics, practitioners, and policymakers. We explain common questions and suggest scope in future work for combining segments.

Suggested Citation

  • Cumming, Douglas & Groh, Alexander Peter, 2018. "Entrepreneurial finance: Unifying themes and future directions," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 538-555.
  • Handle: RePEc:eee:corfin:v:50:y:2018:i:c:p:538-555
    DOI: 10.1016/j.jcorpfin.2018.01.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0929119918300361
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jcorpfin.2018.01.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. William R. Kerr & Josh Lerner & Antoinette Schoar, 2014. "The Consequences of Entrepreneurial Finance: Evidence from Angel Financings," The Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 20-55, January.
    2. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    3. David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 281-292.
    4. Lerner, Josh & Schoar, Antoinette & Sokolinski, Stanislav & Wilson, Karen, 2018. "The globalization of angel investments: Evidence across countries," Journal of Financial Economics, Elsevier, vol. 127(1), pages 1-20.
    5. Wallmeroth, Johannes & Wirtz, Peter & Groh, Alexander Peter, 2018. "Venture Capital, Angel Financing, and Crowdfunding of Entrepreneurial Ventures: A Literature Review," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 14(1), pages 1-129, February.
    6. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August.
    7. Christophe Bonnet & Peter Wirtz & Christophe Haon, 2013. "Liftoff: when strong growth is predicted by angels and fuelled by professional venture funds," Revue de l'Entrepreneuriat, De Boeck Université, vol. 12(4), pages 59-78.
    8. Sabrina T. Howell, 2017. "Financing Innovation: Evidence from R&D Grants," American Economic Review, American Economic Association, vol. 107(4), pages 1136-1164, April.
    9. Cumming, Douglas J. & MacIntosh, Jeffrey G., 2006. "Crowding out private equity: Canadian evidence," Journal of Business Venturing, Elsevier, vol. 21(5), pages 569-609, September.
    10. Andy Cosh & Douglas Cumming & Alan Hughes, 2009. "Outside Enterpreneurial Capital," Economic Journal, Royal Economic Society, vol. 119(540), pages 1494-1533, October.
    11. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
    12. Hornuf, Lars & Schwienbacher, Armin, 2018. "Market mechanisms and funding dynamics in equity crowdfunding," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 556-574.
    13. Cumming, Douglas J. & Johan, Sofia A., 2013. "Venture Capital and Private Equity Contracting," Elsevier Monographs, Elsevier, edition 2, number 9780124095373.
    14. Lerner, Joshua, 1998. ""Angel" financing and public policy: An overview," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 773-783, August.
    15. Brennan, M. J. & Franks, J., 1997. "Underpricing, ownership and control in initial public offerings of equity securities in the UK," Journal of Financial Economics, Elsevier, vol. 45(3), pages 391-413, September.
    16. Lee, Peggy M. & Wahal, Sunil, 2004. "Grandstanding, certification and the underpricing of venture capital backed IPOs," Journal of Financial Economics, Elsevier, vol. 73(2), pages 375-407, August.
    17. Bao, Xiaolu & Johan, Sofia & Kutsuna, Kenji, 2016. "Do political connections matter in accessing capital markets? Evidence from China," Emerging Markets Review, Elsevier, vol. 29(C), pages 24-41.
    18. Rudy Aernoudt, 1999. "Business Angels: Should they fly on their own wings?," Venture Capital, Taylor & Francis Journals, vol. 1(2), pages 187-195, April.
    19. Christophe Bonnet & Peter Wirtz, 2011. "Raising capital for rapid growth in young technology ventures: when business angels and venture capitalists coinvest," Venture Capital, Taylor & Francis Journals, vol. 14(2-3), pages 91-110, December.
    20. Bengt Holmstrom & Jean Tirole, 1998. "Private and Public Supply of Liquidity," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 1-40, February.
    21. Tykvová, Tereza, 2017. "When and Why Do Venture-Capital-Backed Companies Obtain Venture Lending?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 52(3), pages 1049-1080, June.
    22. Douglas Cumming & Uwe Walz, 2010. "Private equity returns and disclosure around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(4), pages 727-754, May.
    23. Vulkan, Nir & Åstebro, Thomas & Sierra, Manuel Fernandez, 2016. "Equity crowdfunding: A new phenomena," Journal of Business Venturing Insights, Elsevier, vol. 5(C), pages 37-49.
    24. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    25. John Armour & Douglas Cumming, 2006. "The legislative road to Silicon Valley," Oxford Economic Papers, Oxford University Press, vol. 58(4), pages 596-635, October.
    26. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    27. Barry, Christopher B. & Muscarella, Chris J. & Peavy, John III & Vetsuypens, Michael R., 1990. "The role of venture capital in the creation of public companies*1: Evidence from the going-public process," Journal of Financial Economics, Elsevier, vol. 27(2), pages 447-471, October.
    28. Christophe Bonnet & Peter Wirtz, 2011. "Investor Type, Cognitive Governance and Performance in Young Entrepreneurial Ventures: A Conceptual Framework," Post-Print halshs-00642737, HAL.
    29. Jeppsson, Hans, 2018. "Initial public offerings, subscription precommitments and venture capital participation," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 650-668.
    30. Megginson, William L & Weiss, Kathleen A, 1991. "Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July.
    31. Christina Guenther & Sofia Johan & Denis Schweizer, 2018. "Is the crowd sensitive to distance?—how investment decisions differ by investor type," Small Business Economics, Springer, vol. 50(2), pages 289-305, February.
    32. Cole, Rebel & Cumming, Douglas & Li, Dan, 2016. "Do banks or VCs spur small firm growth?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 60-72.
    33. Leleux, Benoit & Surlemont, Bernard, 2003. "Public versus private venture capital: seeding or crowding out? A pan-European analysis," Journal of Business Venturing, Elsevier, vol. 18(1), pages 81-104, January.
    34. Prowse, Stephen, 1998. "Angel investors and the market for angel investments," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 785-792, August.
    35. Vincenzo Capizzi, 2015. "The returns of business angel investments and their major determinants," Venture Capital, Taylor & Francis Journals, vol. 17(4), pages 271-298, October.
    36. Douglas J. Cumming & Silvio Vismara, 2017. "De-segmenting research in entrepreneurial finance," Venture Capital, Taylor & Francis Journals, vol. 19(1-2), pages 17-27, January.
    37. Goktan, M. Sinan & Muslu, Volkan, 2018. "Benefits of public reporting: Evidence from IPOs backed by listed private equity firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 669-688.
    38. Ozmel, Umit & Robinson, David T. & Stuart, Toby E., 2013. "Strategic alliances, venture capital, and exit decisions in early stage high-tech firms," Journal of Financial Economics, Elsevier, vol. 107(3), pages 655-670.
    39. Bonini, Stefano & Capizzi, Vincenzo & Valletta, Mario & Zocchi, Paola, 2018. "Angel network affiliation and business angels' investment practices," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 592-608.
    40. Signori, Andrea & Vismara, Silvio, 2018. "Does success bring success? The post-offering lives of equity-crowdfunded firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 575-591.
    41. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
    42. repec:taf:veecee:v:14:y:2012:i:2-3:p:91-110 is not listed on IDEAS
    43. Le Grand, Julian, 1991. "The Theory of Government Failure," British Journal of Political Science, Cambridge University Press, vol. 21(4), pages 423-442, October.
    44. Alicia M. Robb & David T. Robinson, 2014. "The Capital Structure Decisions of New Firms," The Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 153-179, January.
    45. Cole, Rebel A. & Sokolyk, Tatyana, 2018. "Debt financing, survival, and growth of start-up firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 609-625.
    46. Douglas Cumming, 2008. "Contracts and Exits in Venture Capital Finance," The Review of Financial Studies, Society for Financial Studies, vol. 21(5), pages 1947-1982, September.
    47. Lerner, Joshua, 1994. "Venture capitalists and the decision to go public," Journal of Financial Economics, Elsevier, vol. 35(3), pages 293-316, June.
    48. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    49. Wilson, Nick & Wright, Mike & Kacer, Marek, 2018. "The equity gap and knowledge-based firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 626-649.
    50. Silvio Vismara, 2016. "Equity retention and social network theory in equity crowdfunding," Small Business Economics, Springer, vol. 46(4), pages 579-590, April.
    51. Nahata, Rajarishi & Hazarika, Sonali & Tandon, Kishore, 2014. "Success in Global Venture Capital Investing: Do Institutional and Cultural Differences Matter?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(4), pages 1039-1070, August.
    52. Freear, John & Sohl, Jeffrey E. & Wetzel, William Jr., 1994. "Angels and non-angels: Are there differences?," Journal of Business Venturing, Elsevier, vol. 9(2), pages 109-123, March.
    53. repec:bla:jfinan:v:53:y:1998:i:6:p:2161-2183 is not listed on IDEAS
    54. Rajan, Raghuram G, 1992. "Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, vol. 47(4), pages 1367-1400, September.
    55. Johan, Sofia A., 2010. "Listing standards as a signal of IPO preparedness and quality," International Review of Law and Economics, Elsevier, vol. 30(2), pages 128-144, June.
    56. Wetzel, William Jr., 1987. "The informal venture capital market: Aspects of scale and market efficiency," Journal of Business Venturing, Elsevier, vol. 2(4), pages 299-313.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes Wallmeroth & Peter Wirtz & Alexander Peter Groh, 2017. "Institutional Seed Financing, Angel Financing, and Crowdfunding of Entrepreneurial Ventures: A Literature Review," Working Papers hal-01527999, HAL.
    2. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 573-648, Elsevier.
    3. Cumming, Douglas & Zhang, Yelin, 2016. "Alternative investments in emerging markets: A review and new trends," Emerging Markets Review, Elsevier, vol. 29(C), pages 1-23.
    4. Walthoff-Borm, Xavier & Schwienbacher, Armin & Vanacker, Tom, 2018. "Equity crowdfunding: First resort or last resort?," Journal of Business Venturing, Elsevier, vol. 33(4), pages 513-533.
    5. Borello, Giuliana & De Crescenzo, Veronica & Pichler, Flavio, 2019. "Factors for success in European crowdinvesting," Journal of Economics and Business, Elsevier, vol. 106(C).
    6. Douglas Cumming & Satish Kumar & Weng Marc Lim & Nitesh Pandey, 2023. "Mapping the venture capital and private equity research: a bibliometric review and future research agenda," Small Business Economics, Springer, vol. 61(1), pages 173-221, June.
    7. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    8. Douglas Cumming & Minjie Zhang, 2019. "Angel investors around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(5), pages 692-719, July.
    9. Daniel Blaseg & Douglas Cumming & Michael Koetter, 2021. "Equity Crowdfunding: High-Quality or Low-Quality Entrepreneurs?," Entrepreneurship Theory and Practice, , vol. 45(3), pages 505-530, May.
    10. Jeppsson, Hans, 2018. "Initial public offerings, subscription precommitments and venture capital participation," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 650-668.
    11. Bonnet, Christophe & Capizzi, Vincenzo & Cohen, Laurence & Petit, Aurelien & Wirtz, Peter, 2022. "What drives the active involvement in business angel groups? The role of angels' decision-making style, investment-specific human capital and motivations," Journal of Corporate Finance, Elsevier, vol. 77(C).
    12. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August.
    13. Cumming, Douglas & Deloof, Marc & Manigart, Sophie & Wright, Mike, 2019. "New directions in entrepreneurial finance," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 252-260.
    14. Wang, Lanfang & Wang, Susheng, 2012. "Economic freedom and cross-border venture capital performance," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 26-50.
    15. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    16. Massimo G. Colombo & Benedetta Montanaro & Silvio Vismara, 2023. "What drives the valuation of entrepreneurial ventures? A map to navigate the literature and research directions," Small Business Economics, Springer, vol. 61(1), pages 59-84, June.
    17. Simon Kleinert & Christine Volkmann & Marc Grünhagen, 2020. "Third-party signals in equity crowdfunding: the role of prior financing," Small Business Economics, Springer, vol. 54(1), pages 341-365, January.
    18. Kazem Mochkabadi & Christine K. Volkmann, 2020. "Equity crowdfunding: a systematic review of the literature," Small Business Economics, Springer, vol. 54(1), pages 75-118, January.
    19. Chortareas, Georgios E. & Girardone, Claudia & Ventouri, Alexia, 2013. "Financial freedom and bank efficiency: Evidence from the European Union," Journal of Banking & Finance, Elsevier, vol. 37(4), pages 1223-1231.
    20. Grilli, Luca & Murtinu, Samuele, 2014. "Government, venture capital and the growth of European high-tech entrepreneurial firms," Research Policy, Elsevier, vol. 43(9), pages 1523-1543.

    More about this item

    Keywords

    Entrepreneurial finance; Equity crowdfunding; Angel Investors; Venture capital; Private equity; IPOs;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:corfin:v:50:y:2018:i:c:p:538-555. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcorpfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.