Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on...

Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on...

This paper shows that active investors, such as venture capitalists, can affect the speed at which new ventures grow. In the absence of product market competition, new ventures financed by active investors grow faster initially, though in the long run those financed by passive investors are able...

This paper surveys empirical and theoretical studies of various control mechanisms embedded in venture capital contracts. These mechanisms mitigate incentive problems and opportunistic behavior arising in the uncertain environment of financing young hightechnology enterprises that predominantly...

If control of their firms allows entrepreneurs to derive private benefits, it also allows other controlling parties. Private benefits are especially relevant for venture capitalists, who typically get considerable control in their portfolio firms, but not for banks, which are passive loan...

A new method of financing known as equity crowdfunding, propelled by internet technology and deregulation, has emerged rapidly as a promising new source of startup financing and a window into early-stage investment process. By studying companies raising funds on one of the largest US equity...

This paper examines the interaction between venture risk, product market competition and entrepreneurs' choice between bank financing and venture capital (VC) financing. Under bank financing, a debt-type contract emerges as optimal, which allows the entrepreneur to retain full control of the...

This Article analyzes how the accumulation of liquidation rights over multiple rounds of investment in a start-up can result in an aggregate contractual arrangement among the company's investors and its management team that is suboptimal. Liquidation rights determine the allocation of the...