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The paper proposes a simple equilibrium model of venture capital, entrepreneurship and innovation. Venture capitalists … productive and active VC industry boosts innovation driven growth. …
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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 thus jointly contribute to the firm's success, but neither...
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