We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This …-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing … related to innovation. We highlight the new literature on learning and experimentation across multi-stage innovation projects …

Evidence on the "funding gap" for investment innovation is surveyed. The focus is on financial market reasons for … funds for financing such investments and they manage their cash flow to ensure this. Evidence shows that there are limits to …

provision, asymmetric information and hold-up problems. We explore several financing scenarios, including first …-best, monopolistic, syndicated and fully competitive financing. We solve numerically for the entrepreneur's effort, the terms of … financing, the venture capitalist's investment decision and NPV. We find significant value losses due to holdup problems and …

on future prospects is revealed quickly and cheaply, and reduced the relative share of innovation in complex technologies …

failure tolerance and a sharp guillotine helps explain when and where radical innovation occurs …