Recently, a guarantee-investment combination financing mode is popular. This paper considers an entrepreneur who has exclusively an option to invest in a project. The investment is irreversible but delayable with a growth option. Thanks to the financing mode, the initial investment cost is...

Investments in new ventures involve financial contracts between an entrepreneur and outside investors. Investors, such as venture capital firms, represent well-diversified investors. In contrast, the entrepreneur must commit a substantial fraction of human and financial capital to the venture....

We model theoretically the optimal capital structure of entrepreneurial firm relying on an endogenous estimation of the return requested by entrepreneurs that compensates for the risk they incur in case of bankruptcy. We estimate the probability according to the Bayesian approach. We also...