Venture Capital and the Financing of Innovation (eBook)

Bernard Guilhon is Emeritus Professor at Aix-Marseille University, as well as a Professor at SKEMA Business School, France. He has written numerous books and articles on the knowledge economy and innovation.

Acknowledgements vii

Introduction ix

Chapter 1. Venture Capital, Behavior and Performance of Stakeholders 1

1.1. The analytical framework 4

1.1.1. The contractual model and agency problems 4

1.1.2. The resource-dependent approach 9

1.2. From the theoretical framework to the empirical findings: observed behaviors 11

1.2.1. Methodological problems 11

1.2.2. The arbitrations made: the entrepreneurial risk 13

1.2.3. The change of the relationships over time 17

1.2.4. Behaviors of refusal 19

1.2.5. Risk aversion of venture capitalists 22

1.3. The contribution of venture capital to the performance of innovative companies 28

1.3.1. Innovation, growth and employment 29

1.3.2. Survival rates and entrepreneurial persistence 34

1.4. Conclusion 36

Chapter 2. The Sectoral Dynamics of Venture Capital 41

2.1. Orientation by sector 44

2.1.1. The orientation of venture capital by sector in the United States 46

2.1.2. The trajectory in Europe 48

2.1.3. The lessons learned 50

2.2. High-tech industries, a less stable group 55

2.2.1. Knowledge base, high-tech sectors, and venture capital: the macroeconomic influence 56

2.2.2. The influence of advanced industries on the performance of the US economy 59

2.2.3. Business creation, growth thresholds, and the new technology sector 63

2.2.4. Elements of explanation 66

2.3. An econometric model for determining high-tech investment in Europe 74

2.3.1. The approach used: the analytical framework and assumptions made 75

2.3.2. The econometric model 78

2.3.3. Results and discussion 82

2.4. Conclusion 89

Chapter 3. The Three Structures for Interpreting Venture Capital: The Market, Industry and Institutions 91

3.1. An interpretation of venture capital in market terms 92

3.1.1. From market efficiency to wealth creation 93

3.1.2. Characteristics and functions of the market 96

3.1.3. The venture capital market 97

3.1.4. Why talk about a new market? 102

3.1.5. Risk management at market levels 104

3.2. An interpretation of venture capital in terms of industry 107

3.2.1. The spread of an industrial logic 107

3.2.2. The relative weight of venture capital investment in relation to GDP 112

3.3. The role of institutions in the dynamics of the venture capital industry 126

3.3.1. An econometric model for determining venture capital investment 127

3.3.2. Specific analysis of institutional factors 135

3.4. Conclusion 140

Conclusion 143

References 151

Index 161