The aim of this paper is to evaluate the causal effect of issuing equities on the probability that the firm engages in R&D activity. In financing innovation equity is a better source of external finance than debt. Equity does not require collateral, does not increase moral hazard problems...

Italian startups financed by venture capitalists (VCs) experience a faster growth in size and become more innovative compared with other startups. VC-backed firms also show a much larger increase in equity and a reduction in their leverage. This evidence is obtained by comparing a representative...