Public policy for start-up entrepreneurship with venture capital and bank finance

Public policy for start-up entrepreneurship with venture capital and bank finance

Keuschnigg, Christian; Nielsen, Søren Bo

Document Version Final published version

Publication date:

2003

License CC BY-NC-ND

Citation for published version (APA):

Keuschnigg, C., & Nielsen, S. B. (2003). Public policy for start-up entrepreneurship with venture capital and bank finance.

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Download date: 31. Oct. 2022

P UBLIC P OLICY FOR S TART - UP E NTREPRENEURSHIP WITH V ENTURE C APITAL AND B ANK F INANCE

CHRISTIAN K EUSCHNIGG

S OREN B O N IELSEN

CES ^IFO W ^ORKING P ^APER N ^O . 850

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An electronic version of the paper may be downloaded

• from the SSRN website: www.SSRN.com

• from the CESifo website: www.CESifo.de

CESifo Working Paper No. 850

P UBLIC P OLICY FOR S TART - UP

E NTREPRENEURSHIP WITH V ENTURE

C APITAL AND B ANK F INANCE Abstract

This paper proposes and analyses a model of start-up investment. Innovative entrepreneurs are commercially inexperienced and can benefit from venture capital support. Only part of them succeed in matching with a venture capitalist while the rest must resort to standard bank finance. We consider a number of policies to promote entrepreneurship and venture capital backed innovation.

JEL Classification: D82, G24, G28, H24.

Keywords: venture capital bank finance, matching, moral hazard, public policy.

Christian Keuschnigg University of St. Gallen

Varnbuelstrasse 19 CH – 9000 St. Gallen

Switzerland

christian.keuschnigg@unisg.ch

Soren Bo Nielsen Copenhagen Business School

Solbjerg Plads 3 DK-2000 Frederiksberg

Denmark sbn.eco@cbs.dk

We thank our discussant on CESifo conference on Venture Capital, Entrepreneurship and Public Policy, Rune Stenbacka, and other participants for comments. We are also grateful for comments in a research seminar at WZB in Berlin. EPRU is financed by a grant from The Danish National Research Foundation.

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