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We study the investment patterns of different types of venture capital (VC) investors in Europe: independent VC, corporate VC, bank-affiliated VC and governmental VC. We rely on a unique dataset that covers 1663 first VC investments made by 846 investors in 737 young high-tech entrepreneurial ventures in seven European countries. We compare the relative specialization indices of the different VC investor types across several dimensions that characterize investee companies: industry, age, size, stage of development, distance from the investor and country. Our findings indicate that VC investor types in Europe differ substantially in their investment patterns when compared to one another and that, in terms of investment patterns, governmental VC investors appear to be the most distinct type of VC investor. The investment patterns of different VC investors are stable over time and similar across different European countries. Finally, the investment patterns of the different VC investor types in Europe are significantly different from those observed in the USA.

This paper investigates how far in space university knowledge goes to breed the creation of knowledge-intensive firms (KIFs), depending on the nature (either codified or tacit) and quality of this knowledge. We consider the impact of knowledge codified in academic patents and scientific publications and tacit knowledge embodied in university graduates on KIF creation in Italian provinces in 2010, while distinguishing between local university knowledge created by universities located in the same province and external university knowledge created by universities located outside the province. Our econometric estimates indicate that the positive effects of scientific publications and university graduates are confined within the boundaries of the province in which universities are located. Conversely, the creation of new KIFs in a focal province is positively affected by both local and external university knowledge codified in academic patents, even though the positive effect of this external knowledge rapidly diminishes with geographic distance. Furthermore, the above effects are confined to high-quality universities; low-quality universities have little effect on KIF creation.

This article examines how the scientific specialization of universities impacts new firm creation across industries at the local level. In accordance with the Pavitt-Miozzo-Soete taxonomy, we consider eight industry categories, which reflect the characteristics of firms' innovation patterns and, ultimately, the knowledge inputs that firms require. Using data on new firm creation in Italian provinces (i.e., at the NUTS3 level), we estimate negative binomial regression models separately for each industry category to relate new firm creation to the scientific specialization in basic sciences, applied sciences and engineering, and social sciences and humanities of neighboring universities. We find that universities specialized in applied sciences and engineering have a broad positive effect on new firm creation in a given province, this effect being especially strong in service industries. Conversely, the positive effect of university specialization in basic sciences is confined to new firm creation in science-based manufacturing industries, even if this effect is of large magnitude. Universities specialized in social sciences and humanities have no effect on new firm creation at the local level whatever industry category is considered.

This paper aims to shed new light on start-up financing of new technology-based firms (NTBFs) and the existence of credit constraints that may negatively affect their activity. For this purpose, we analyze the different sources of start-up financing used by NTBFs and investigate several characteristics that may influence the extent of recourse to bank loans. In the empirical section, we consider a sample composed of 386 Italian NTBFs that operate both in manufacturing and services. We estimate double-censored tobit and bivariate tobit models so as to highlight the determinants of (i) the financial leverage, measured by the ratio of bank debt to total capital, and (ii) the amounts of personal capital and bank loans of firms at start-up, respectively. Our findings support the view that the credit market is imperfect and there exists a financing hierarchy. In fact, only a minority of firms resorts to outside financing, and especially to bank debt. In addition, the level of financial leverage is not random; it increases with an increase of the predicted amount of firms' total initial capital, while it decreases with variables such as the number of owners and the work experience of founders that are indicative of greater personal wealth available to finance firms' start-up. Lastly, the size of the bank loans obtained by firms generally is small and it is quite insensitive to demand-side factors that instead determine the amount of personal and total capital, with the notable exception of scale economies in the industry of the start-up. In other words, in accordance with the argument that credit to NTBFs is rationed, the loan supply curve is highly inelastic, even though not perfectly so.

The drivers of the valuations of entrepreneurial ventures are an important issue in entrepreneurial finance, but related research is fragmented. The theoretical perspectives and the drivers highlighted by previous studies differ based on the financial milestones during a venture’s lifecycle in which the valuation is performed (e.g., venture capital investments, initial public offerings, acquisitions). The introduction of new digital financing channels (e.g., crowdfunding, initial coin offerings) that allow retail investors to directly invest in entrepreneurial ventures challenge our understanding of the drivers of valuation. This change has also increased the diversity in the sequence of financial milestones that ventures go through, with important implications for valuation. We conduct a systematic literature review and develop a map highlighting how and why the drivers of venture valuations and their underlying theoretical lenses vary across the different milestones that ventures go through. The map allows us to outline new promising avenues for future research.Plain English SummaryIn this paper, we conduct a systematic literature review on entrepreneurial ventures’ valuation drivers and their underlying theoretical lenses, highlighting how and why they vary along firms’ life cycle. The valuation of entrepreneurial ventures is a challenging task for practitioners and a relevant issue that attracts the attention of scholars in entrepreneurship, finance, management, and economics. The literature on the topic is highly fragmented. Indeed, the context in which venture valuations are observed (e.g., in private deals or public offerings) differs across different financial milestones. The introduction of new digital financing channels (e.g., crowdfunding, initial coin offerings) and the increased diversity in the sequence of financial milestones that ventures go through further challenge our understanding of valuation drivers. This study is primarily aimed at scholars, offering them a map to create order in what we know about the drivers of entrepreneurial venture valuations and indicating promising avenues for future research.

The landscape for entrepreneurial finance has changed strongly over the last years. Many new players have entered the arena. This editorial introduces and describes the new players and compares them along the four dimensions: debt or equity, investment goal, investment approach, and investment target. Following this, we discuss the factors explaining the emergence of the new players and group them into supply- and demand-side factors. The editorial gives researchers and practitioners orientation about recent developments in entrepreneurial finance and provides avenues for relevant and fruitful further research.

Radical science provides new insights and elaborates new concepts that depart significantly from past paradigms. Radical innovation creates entirely new markets or product classes, or leads to major product replacements within existing markets. After providing a brief summary of the scholarly debate concerning the identification and measure of radical science and innovation, we review three new contributions to the topic and suggest areas of future research.

The “entrepreneurial ecosystem” metaphor is capturing attention in academia, industry, and government. The entrepreneurial ecosystem approach is used in corporate, national, or local contexts, and has grown in prominence given the vital need to transform economies around the creation of innovative ideas, products, services, and technologies. Entrepreneurial ecosystems involve a network, a system, of interactions of individuals and organizations, like financial intermediaries, universities and research institutions, suppliers and customers, multinational companies, or the government. The entrepreneurial ecosystem literature has thus mainly focused on identifying the relevant stakeholders like entrepreneurial firms and entrepreneurs and how they interact with other stakeholders within a more or less defined system. Despite the popularity of the entrepreneurial ecosystem approach, the literature has almost overlooked and largely ignored the governance of entrepreneurial ecosystems. This special Issue of Small Business Economics critically examines issues concerning the governance of entrepreneurial ecosystems.

Reward-based crowdfunding not only provides finance to entrepreneurs but also generates valuable information on their products’ potential demand, their feasibility, and customers’ satisfaction. This study investigates how information from the campaigns, relating to the funding amount raised in excess of target capital, delays (if any) in product delivery, and crowd sentiment, influences the chances that a venture receives equity capital from professional investors in the aftermath of a campaign. To build a sample of ventures at risk of obtaining equity capital from professional investors, we focus on 300 successful hardware campaigns that have raised $100,000 or more on Kickstarter and Indiegogo. Our results indicate that the information provided by crowdfunding campaigns influences the odds of receiving external equity in the aftermath of the campaign; however, this relationship depends on whether the ventures have already backing from professional investors or not. Our study offers insights into what information professional investors use to assess crowdfunded ventures.