This paper offers a new explanation for the prevalent use of convertible securities in venture capital finance …

level and quality of entrepreneurship and the level of effort by entrepreneurs and venture capitalists. We also provide …

compatible equity finance, they support the venture with managerial advice to raise survival chances. We analyze several policy … investment, and output subsidies at the production stage. While these measures stimulate entrepreneurship, only cost …

In this paper we set up a model of start-up finance under double moral hazard. Entrepreneurs lack own resources and … business experience to develop their ideas. Venture capitalists can provide start-up finance and commercial support. The effort … paradoxically contribute to higher quality of venture capital finance and welfare. Subsidies to physical investment in VC …

A model of start-up finance with double moral hazard is proposed. Entrepreneurs have ideas but lack own resources as … well as commercial experience. Venture capitalists provide start-up finance and managerial support. Both types of agents … place, limitations on loss off-set may paradoxically contribute to higher quality of venture capital backed entrepreneurship …