Financing Innovation

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The financing innovation in entrepreneurship and hedge funds

The financing innovation in entrepreneurship and hedge funds

The 2008 financial crisis has devastating effects on finance accessibility in real investment. Campello, Graham, and Harvey (2010)’s survey 1 indicates that the inability to borrow exter- nally caused many firms to bypass attractive investment opportunities, nearly 90 % of con- strained companies say that financial constraints restrict their pursuit of attractive projects, and more than half of these firms are forced to cancel valuable investments during the cri- sis. Using a data set of over 10,000 UK small- and medium-sized enterprises (henceforth SME) employers, Lee, Sameen, and Cowling (2015) find that it is harder for innovative firms to access finance than other firms, which may lead to a long-term drag on the economy. Using detailed firm-level survey data on twenty-four hundred firms in China, Ayyagari, Demirg-Kunt, and Maksimovic (2010) find that only a relatively small percentage of firms (20%) utilize bank loans and most firms in the sample rely on a large informal sector and alternative financing channels (i.e. financing innovation).
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Financing innovation: two models of private equity investment

Financing innovation: two models of private equity investment

7 A few research papers do contribute to investigate this research gap and characterize other ways to invest in innovation. Generally, studies on the impact of buyout on entrepreneurship have shifted from an historical claim that private equity would negatively affect firm’s ability to sustain entrepreneurial activities to evidences that private equity backed firms do promote entrepreneurial investment opportunity (Amess, Stiebale et al. 2015), especially through MBO (Bruining, Verwaal et al. 2013). A paper emphasizes new conditions on investor mindset for a buyout operation to foster corporate innovation thanks to either incremental changes or renewal (Wright, Hoskisson et al. 2001). Instead of controlling managers like in the traditional perspective, this entrepreneurial approach focuses on promoting innovative ones. Yet, empowering managers still don’t give investors clues on how to concretely impact innovation strategy. Another study (Toma and Montanari 2017) showed how a private equity investor may help the development of new organizational capabilities in the specific context of family firms. On the venture capital side, an original paper (Rin and Penas 2017) recently pointed out that investors urge firm’s to strengthen their absorptive capacity, hence innovation strategy (Cohen and Levinthal 2000), by favoring a “make and buy” R&D. However, there is not any clear model yet that builds on this emerging literature and would complement existing approaches to help support repeated innovation capabilities.
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Financing Innovation: A Complex Nexus of Risk & Reward

Financing Innovation: A Complex Nexus of Risk & Reward

weaknesses of our Indian economy for attracting VC financing for fresh start-ups. We are excellent in economic activity and to some extent in capital market, but mostly we have to improve ourselves in the remaining four indicators. Especially, our first priority is to focus more on ”Taxation” sub-index as our government is very poor in providing entrepreneurial as well as angel & VC investment tax credit (In the budget 2015-16, there are several propos- als for encouraging MSME entrepreneurs, for instance, loans to MSME sector being brought under priority sector, creation of small finance banks to supply credit to MSMEs etc.), and reducing Administrative burden. Second priority should be to improve ”Human and Social Environment” sub-index, which is in lower position due to labor regulations and excessive bribing & corruption. Subsequently, we have to take care about ”Investor Protection and Corporate Governance” sub-index including security of property rights and quality of legal enforcement. And lastly we have the option to revamp the existing entrepreneurial opportu- nities through reducing burdens of starting and running a business, maintaining simplicity of closing a business, and incentivising innovation throughout the economy. Therefore, government has to be more active and effective to clear different obstructions on the way of financing fresh and innovative ideas or activities for achieving multi-dimensional growth in the future.
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Financing Innovation: Markets and the Structure of Risk

Financing Innovation: Markets and the Structure of Risk

This chapter will argue that much of the explanation stems from Australia's failure ro develop financial and organisational vehicles capable of managing behind; in biotechnology the spec[r]

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Financing Innovation: The Role of Trade Finance Insurance

Financing Innovation: The Role of Trade Finance Insurance

• Limited incentives to exports of capital goods and high-tech products; • No incentive to develop long-term projects due to credit and political risks; • Limited support to R&D... T[r]

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The Financing of R&D and Innovation

The Financing of R&D and Innovation

As should be apparent from much of the preceding discussion, any problems associated with financing investments in new technology will be most apparent for new entrants and startup firms. For this reason, many governments already provide some of form of assistance for such firms, and in many countries, especially the United States but also others such as Israel and Canada, there exists a private sector “venture capital“ industry that is focused on solving the problem of financing innovation for new and young firms. This section of the paper reviews what we know about these alternative funding mechanisms, beginning with then discussing the venture capital solution and then discussing public policy efforts. The discussion focuses on the United States for the most part, since the sector there is often the model for other countries, and most of the empirical evidence is based on US data.
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Financing sustainable innovation : From a principal-agent to a collective action perspective

Financing sustainable innovation : From a principal-agent to a collective action perspective

the opportunity to benefit over time from the information gathered, in particular in multiple lending decisions (Petersen & Rajan, 1994). Monitoring of the loan is operationalized through continued direct contact and observation of the SME’s performance, taking a holistic approach that encompasses most business model components. Relationship lending allows banks to provide additional services such as market intelligence, access to customers and other stakeholder crucial for the firm’s success and sector expertise, similar to a venture capitalist or business angel (Boot & Thakor, 2000). Relationship lending is also associated with small, opaque and/or innovative firms due to the use of ‘soft’ information which is particularly valuable if hard information about track record, assets or cash flows are lacking (Brancati, 2015). Strong relationships between banks and firms are shown to increase bank willingness to take risks/lend for innovation since potential costs (of default) are spread out over a longer period of bank earnings from a client (Brancati, 2015; Jiménez & Saurina, 2004; Petersen & Rajan, 1994). Also, relationships are shown to lower collateral amounts requested by banks (Berger & Udell, 1995). However, it can be difficult for young, innovative firms to build up a strong banking relationship if they require major capital injections early in their existence (Carpenter & Petersen, 2002a).
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Currency innovation for sustainable financing of SMEs: context, case study and scalability

Currency innovation for sustainable financing of SMEs: context, case study and scalability

Although ICSR research is mostly housed within management studies, it relates to many other fields, including economics, politics, geography, environmental studies, sociology, development studies and law. As currency innovation presents a range of implications for economy and society, one might expect all of those disciplines to research the topic in future. As currency innovation is novel to most academic disciplines, it means that it is possible to review literature in all these disciplines to orient oneself in this landscape. Therefore, your author attempted a comprehensive review of journal articles across all the disciplines just named. Before explaining the process, I should note that as I was not focusing on historical experiences, two disciplines with fascinating contributions to understanding money and currency were not included in my literature review: history and anthropology (e.g. Graeber, 2011). Though they would have shown that money has been many different things over the years, and often forms of debt obligation, that background is not necessary for this paper.
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Analysis of pan-African Centres of excellence in health innovation highlights opportunities and challenges for local innovation and financing in the continent

Analysis of pan-African Centres of excellence in health innovation highlights opportunities and challenges for local innovation and financing in the continent

Figure 3, bar diagrams A and B respectively. The data show a steady and modest increase in annual funding over the three year period largely due to increased fund- ing from external sources, while funding from within 12Africa decreased from 39% to 32% (Figure 3A). This suggests that most African countries and governments were unable to sustain investment in health R&D in the period and the hope is that this trend will now change. However, when the budget for the manufacturers are included in the analysis, the internal/external ratio was reversed with more funding coming from internal sources up to an average of 57% over the three year period (Figure 3B). This suggests that funding from both private and public sectors in Africa, largely targets manufacturing activities. Although a steady increase in funding for health innovation was observed over a three year period (Figure 3), our data highlights a number of challenges as well as opportunities for African health innovation financing. The annual budget of departments or units, within African institutions range from five hun- dred US Dollars ($500) to thirty five million US Dollars ($35 million) with a mean value of $1.49 million. The relatively low budget of most African institutions com- pared to other parts of world, could explain some of the challenges faced by African institutions in translating their research findings into usable health products. It
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Research on Innovation of Science and Technology Investment and Financing  of SMEs in Intellectual Property

Research on Innovation of Science and Technology Investment and Financing of SMEs in Intellectual Property

In China, the trading market of intellectual property are varied and poor professional. If there are problems, the poor-property disposal channel will lead the liquidity of intellectual property rights to be a new problem. Because intellectual property rights are different from real estate and other collateral which can be transferred quickly, especially in the environment of low protection domestic of the intellectual property, small trading market, and the limited circulation and transaction objects. Also, in credit guarantees aspects intellectual prop- erty investment and financing also faced with obstacles, because the value of intellectual property is uncertain and returns are not control. And investment and financing needs the certify of the credit guarantee institutions. But the bank, large financial institutions often can’t guarantee or loan to them because of their small scale and low credit. So the market urgently need emerging specifically guarantee institutions of intellectual property. In the start-up period, the high-tech SMEs lack credit guarantee people and cannot get effective financing.
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Adverse selection and financing of innovation: is there a need for R&D subsidies?

Adverse selection and financing of innovation: is there a need for R&D subsidies?

There are, however, several arguments why the proposed solutions may fail to eliminate financing constraints, especially in the case of science and technology-based start-ups. First, such entrepreneurs may lack the means to signal project quality. Human-capital intensive projects do not often involve collateralizable assets. Own wealth is insufficient or liquid, and is generally needed to invest in the project. Second, reputation building takes time and start-ups, almost by definition, cannot have established reputation. Third, the screening activities of financial intermediaries may be inefficient. According to the so called competition-stability tradeoff, competition in banking sector can reduce banks’ information surplus and thereby their incentives to gather information (eg Keeley, 1990). 1 Information reusability can also be hampered
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Currency innovation for sustainable financing of SMEs: context, case study and scalability

Currency innovation for sustainable financing of SMEs: context, case study and scalability

and Doyle, 2014). It would also invite far greater attention to support for Small and Medium Sized Enterprises (SMEs), given they are the major employer in most economies and spend their income more locally than large Multinational Corporations. Attention has been paid to how to support SMEs and microentrepreneurs serving the income poor in developing countries, with support for social entrepreneurship and achieving umbrella sustainability certification for groups of firms. The role of microfinance in helping microentrepreneurs has also received major attention, with the impact on social progress being both variable and contested (Bateman, 2010). However, the systemic question of better financing SMEs at scale so that they can grow, create jobs and diversify economies, has not featured significantly in the ICSR field, with little attention since a United Nations project on this issue over ten years ago (Bendell and Chawla, 2007). Meanwhile bank lending to SMEs has declined continually in many Western nations, as the banks find simpler and less risky profits to be made by lending for property purchases (Ryan-Collins et al, 2011). How does this issue relate to ICSR? Initially we might consider bank practices, and how they could be upgraded to improve SME and
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Social Financing and Payment by Results: Greater driver in efficiency, innovation, and impact in tackling social problems?

Social Financing and Payment by Results: Greater driver in efficiency, innovation, and impact in tackling social problems?

There is mounting pressure on government to provide funding for social services; however, due to budget constraints and complex social issues, this has become a challenge (Social, 2014). With the increase of poverty, behavioral and mental health issues in America, the status quo in the social sector simply will not hold (Shah, 2013). In 2013, fourteen percent of Americans were living below the poverty line (Gongloff, 2014), with one in five children living in poverty (Shah, 2013, p.2). In 2011, under President Obama, the US government decided to try a different method in assisting the high demand for social services, social innovation financing (Goldmark, 2011). This paper focuses on the technology of social impact bonds, which falls under Pay for Success financing (Shah, 2013). Using a case study design, it is investigated if outcomes-based reimbursement drives great efficiency, innovation and impact in tackling social problems. Through a deeper dive, exploration of reimbursing social programs based on their outcomes is an attractive model to investors and to what extent stakeholders feel that the SIB will lead to great innovation or efficiency. To do this, one of New York States‘ Pay for Success awardees was analyzed -- the Intensive Community Asset Program (I-CAP), which creates alternatives for Family Court Judges and Probation officers who seek to avoid placement of youth into high cost institutional settings (James-Wilson, 2014). The changing landscape of government funding of social programming, multi-stakeholder financing strategies are becoming the new trend in nonprofit funding. This report provides a more robust learning on this new funding mechanism.
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Regulating Equity Crowdfunding Service Providers - An Innovation-Oriented Approach to Alternative Financing

Regulating Equity Crowdfunding Service Providers - An Innovation-Oriented Approach to Alternative Financing

In recent years the advancements in technology have led to an upheaval in many markets. In the financial sector, technological innovations have led to the emergence of technology-enabled financial services, ranging from new product offerings to new business concepts. In this article, the regulatory challenges facing online intermediary platforms, and in particular equity-based crowdfunding platforms, are discussed more in detail. An integral part of crowdfunding is the prevalence of actors who provide crowdfunding services, operating digital crowdfunding platforms, where the business funding interest of investors and companies is matched. Equity-based digital platforms have over the past few years become an important financing alternative, especially for small and medium-sized growth companies. However, such platforms have only recently attracted the attention of regulators. In this article, the regulatory framework covering equity-based crowdfunding platforms in the Nordic countries is discussed in detail. It is concluded that the Nordic countries have very different approaches to regulating crowdfunding platforms, hindering the development of a pan-Nordic market in equity crowdfunding. The proposal for a pan-European opt-in legislation covering Crowdfunding Service Providers (CSPs) is likely to complicate the regulatory framework in the Nordic countries even further. Although the Nordic countries have chosen different paths in regulating equity-based CSPs, the regulatory regime each country has chosen for the registration or authorization of CSPs does not seem to be decisive of the success of local equity crowdfunding markets. This does not mean that regulation of the sector is irrelevant for the success of an alternative finance market. On the contrary, the regulatory requirements on crowdfunding project owners seem to have a significant effect on the development of the market. It is suggested in the article that the dismal development of equity crowdfunding in Norway and Denmark is likely to be caused by the restrictions on offers in private company shares on online intermediary platforms in the two countries, and not by the admittedly burdensome authorization requirements applicable to CSPs. The legal environment is thus of importance for the development of equity crowdfunding in individual Nordic countries, although not in the way it is usually perceived to be of importance.
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Analysis of Financing Dilemma of Local Government Financing Platform

Analysis of Financing Dilemma of Local Government Financing Platform

Most of the previous researches have studied the financing behavior, regula- tory environment and transformation issues of the financing platform from the macro level. From the perspective of the combination of macro and micro, the article obtains public data on the basis of macro analysis, and analyzes the mi- cro-level reasons with a company as a sample. Through analysis, the financing dilemma of the financing platform mainly includes: increased financing re- quirements, rising financing costs, and increased debt repayment pressure. The causes of these dilemmas are not only the changes in the external environment, but also the internal reasons for the existence of the financing platform. There- fore, the financing platform needs to be transformed to achieve market-oriented operations. The specific analysis is as follows.
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Microcredit using Equity Financing: an Alternate Approach to Equity Financing in an Interest Free Financing

Microcredit using Equity Financing: an Alternate Approach to Equity Financing in an Interest Free Financing

Interest is prohibited in all monotheist religions; however, it features as an essential element in practiced capitalism. Interest based financial system has created two major havocs in last two decades i.e. in East Asia in 90s and in the Great Recession since 2007. This paper highlights the extent of development problems faced by the world. With interest at zero bound in U.S since 2008 and with unemployment at 11% level, scarcity of capital cannot solely explain this. However, interest based Microfinance has had mixed results. Interest based lending at Micro level is usually carried out at very high interest rates, more so when the lending takes place informally without institutional intermediation. Institutional intermediation serves a good purpose, but it can also be designed using equity modes of financing. This can relieve the financee and increase diversity of entrepreneurial activities as in debt based microfinance, not much diversity can happen with compulsory servicing of debt. The related questions as to how the institutional arrangement would work to carry out this system, how documentation problems be resolved, how trust level can be created, how effective monitoring can be undertaken and how the intermediaries generate finance themselves and mobilize funds are answered in this paper.
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Innovation in. Guiding Innovation

Innovation in. Guiding Innovation

There was a very wide variance in the level of informa- tion that The Carriers provided relative to the SLAs that they offer. Based on the information that was provided, the SLAs that The Carriers provide for their Layer 3 MPLS- based VPNs do not appear to show much innovation over what was available two or three years ago. In particular, it is still customary to have the SLAs be reactive in focus; i.e., the computation of an outage begins when the cus- tomer opens a trouble ticket. One of The Carriers even excludes from their availability target any network outage of less than a minute in duration. In addition, the level of compensation for violation of service level agreements remains quite modest.
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To what extent do financing constraints, herding behavior and ownership affect firms’ innovation activities? Evidence from China

To what extent do financing constraints, herding behavior and ownership affect firms’ innovation activities? Evidence from China

Table 3.4 shows regression results of the baseline (Equation 3.1) and augmented (Equation 3.2) specifications of the Euler equation for the full sample by using different estimators: the pooled Tobit, random effects Tobit and IV Tobit. A total of 263,272 observations are left-censored, which indicates these firms have no sales generated from new products. Only 33,923 observations are uncensored, revealing the relatively low level of innovation capacity of Chinese firms 16 . Focusing on the baseline specification, we focus on the coefficient and marginal effects associated with the lagged cash flow term. According to the Euler equation theoretical model, we should observe a negative relationship between new product sales and lagged cash flow under the assumption of perfect capital markets without credit constraints. However, if lagged cash flow is significantly positively related to new product sales, this suggests firms’ innovation activities are subject to financial constraints. Our regression results consistently show that the lagged cash flow estimates in the baseline specification are all positive and statistically significant. This finding does not conform to the predictions of the structural model. This suggests that, in line with our Hypothesis 1, Chinese firms’ innovation activities are constrained by the availability of internal finance. As regards to marginal effects, a unit standard deviation rise in the cash flow ratio increases the probability of firms being involved in new product sales by 0.016%, 0.028%, and 0.050%, respectively when using the pooled Tobit, random effects Tobit, and IV Tobit estimators. On the other hand, taking the censored nature of our response variable into account, one standard
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Financing the Health Care System: Is Private Financing an Alternative?

Financing the Health Care System: Is Private Financing an Alternative?

At the other, under some variants of the Health Maintenance Organisations HMO model -- a modification of the pure private funding model to be discussed in detail in Chapter 4 -- consumer[r]

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Financing education

Financing education

In a climate of continuing financial restraint, meeting increasing demands for education from the public purse is becoming more difficult for governments internationally. In addition, balancing public and private financing is seen as a key policy issue for many. 1 This briefing paper details sources of income for compulsory school-age education in Northern Ireland and considers EU funding streams. It also outlines the proportions of private and public education spending internationally and considers a number of examples of income generation within the education sector.

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