with respect to the level and quality of entrepreneurship and the level of effort by entrepreneurs and venture capitalists …

If control of their firms allows entrepreneurs to derive private benefits, it also allows other controlling parties … and analyze entrepreneurs' financing strategy between the two. We find that, in all strict Nash Equilibria, entrepreneurs … who value private benefits more choose banks while the rest choose venture capital. Thus, bank-financed entrepreneurs …

jobs. Instead, failed entrepreneurs must seek other jobs in an imperfectly informed external labour market. While this is … ex-post inefficient, it provides entrepreneurs with high-powered incentives ex ante. We show that two types of equilibria … can arise (and sometimes coexist). In a low (high) entrepreneurship equilibrium, the market for failed entrepreneurs is …