Start-up firms typically produce negative cash flows in the first years after their foundation. As a consequence, standard discounted cash flow methods are not applicable, often forcing practioneers into using theoretically dissatisfying devices like multiples. In this paper, we develop a...

This study develops a parsimonious theoretical model to investigate the pecking order in financing for start-up ventures, especially with convertible securities, under adverse selection where a firm’s investment possibly has a negative value. While the role of convertible securities is limited...

Innovative Unternehmensgründungen werden in zunehmendem Maße von Venture Capital (VC) Gesellschaften finanziert, die mit dem Gebrauch spezieller Finanzierungsinstrumente die diversen Agencyprobleme dieser Situation zu bewältigen versuchen. Dieses Papier gibt einen Überblick über die...