Venture Capital Investment Strategies Under Financing Constraints: Evidence from the 2008 Financial Crisis

Conti, Annamaria; Dass, Nishant; Lorenzo, Francesco Di; Graham, Stuart

doi:10.2139/ssrn.2781674

Cited by 7 publications

(22 citation statements)

References 37 publications

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“…Extant studies have examined how innovation systems and their constituents tackle a crisis as it unfolds, resurrect from the aftermath of it and prevent it from happening again. Specifically, this body of literature has drawn attention to innovation issues vis‐à‐vis public health emergencies (e.g., Archibugi and Bizzarri, 2004; Moors and Faber, 2007) and global financial crises (e.g., Hud and Hussinger, 2015; Conti et al, 2019). Propositions developed from two lines of inquiry offer a departure point for understanding the drivers of innovation in a time of crisis.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Bottom‐up solutions in a time of crisis: the case of Covid‐19 in South Korea

2021

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Innovation systems have seen diverse actors attempting to tame the Covid‐19 crisis, under varying degrees of government direction. Largely neglected in scholarly and public attention, however, are ‘bottom‐up’ solutions arising from the periphery of innovation systems. Drawing on inductive case research on a fringe doctor who invented the idea of the drive‐through testing system, and two university student teams that developed coronavirus applications, this study examines how peripheral actors generate innovative, bottom‐up solutions at speed in a time of crisis. Our findings reveal that, in a crisis situation, bottom‐up solutions transpire on the basis of three innovation drivers: (a) peripheral status, expediting the commence of innovation activities; (b) interdisciplinary collaboration, enabling access to a greater spectrum of knowledge and perspectives; and (c) prior knowledge, prescribing the direction of solution generation. We also identify that system intermediaries support the innovation activities of peripheral actors, thereby helping bottom‐up solutions to become more customer facing. Such functions of intermediaries include demand articulation, technical assistance, and promulgation of generated solutions. Our findings offer theoretical implications for the literature on innovation in a time of crisis and practical implications for governments and organizations preparing themselves for the potential second wave of coronavirus emergencies, or even a completely new form of future crisis.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Bottom‐up solutions in a time of crisis: the case of Covid‐19 in South Korea

2021

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“…While research emphatically suggests access to bank finance becomes more problematic for innovative firms during previous crisis episodes such as the global financial crisis (GFC) (Cowling et al, 2012;Demirgüç-Kunt et al, 2020;Lee et al, 2015), much less evidence exists for how these shock events influence the market for entrepreneurial sources of finance from VCs and BAs (Block and Sandner, 2009;Conti et al, 2019). VC is very volatile which makes this form of investment highly susceptible to the uncertainty caused by shock events (Gompers et al, 2008) and some have speculated that entrepreneurial finance may be especially affected by the current pandemic (Brown and Rocha, 2020).…”

Section: Introductionmentioning

confidence: 99%

Financing entrepreneurship in times of crisis: Exploring the impact of COVID-19 on the market for entrepreneurial finance in the United Kingdom

Brown

Rocha

Cowling

2020

International Small Business Journal

214

161

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This commentary explores the manner in which the current COVID-19 crisis is affecting key sources of entrepreneurial finance in the United Kingdom. We posit that the unique relational nature of entrepreneurial finance may make it highly susceptible to such a shock owing to the need for face-to-face interaction between investors and entrepreneurs. The article explores this conjecture by scrutinising a real-time data source of equity investments. Our findings suggest that the volume of new equity transactions in the United Kingdom has declined markedly since the outbreak of the COVID-19 pandemic. It appears that seed finance is the main type of entrepreneurial finance most acutely affected by the crisis, which typically goes to the most nascent entrepreneurial start-ups facing the greatest obstacles obtaining finance. Policy makers can utilise these real-time data sources to help inform their strategic policy interventions to assist the firms most affected by crisis events.

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“…2 Throughout shocks and crisis events, levels of uncertainty escalate at such speed their impacts become extremely draining for entrepreneurs and entrepreneurial actors love banks and investors. [3][4][5][6] Therefore, deciphering uncertainty is an integral a part of ascertaining however entrepreneurship is wedged by a crisis COVID-19 pandemic, especially…”

Section: Introductionmentioning

confidence: 99%

“…In doing therefore it enhances different students who have examined however previous crisis episodes impact entrepreneurial finance. 4,6 Economic development associated differing kinds of entrepreneurial efforts:…”

Section: Introductionmentioning

confidence: 99%

“…29,30 The investors usually use their personal networks to elicit deals so superintend their investee firms by staying "close to their money". [31][32][33] What factors might justify this differential impact on different types and phases of entrepreneurial finance? Latestage deals are generally undertaken by giant firms with well-established entrepreneurial firms which can create them additional recession proof.…”

Section: Introductionmentioning

confidence: 99%

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The impact of COVID-19 pandemic-Entrepreneurial Uncertainty and Effect on Economic Development

Himani¹,

Anand²,

Barwal³

et al. 2020

IJPNS

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This paper illustrates however chronic uncertainty caused by crisis events affects the provision of entrepreneurial sources of finance for starts-ups and tiny and medium sized enterprises (SMEs). To explore this line of argument, this paper examines crunch base period knowledge examining entrepreneurial finance investments in China throughout development COVID-19 crisis. The paper shows that these equity investments unerect dramatically within the immediate aftermath of COVID-19 virus, leading to a year on year decrease of 60% within the total volume of investment raised between quarter one in 2019 and quarter 1 in 2020. Importantly, the paper found early-stage seed investments falling the steepest, suggesting aborning starts-ups are those most heavily affected by the crisis. Overall, enterprise policy manufacturers have to be compelled to become higher attuned at watching period of time data sources to mitigate chronic entrepreneurial uncertainty via strategic policy responses.

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Venture Capital Investment Strategies Under Financing Constraints: Evidence from the 2008 Financial Crisis

Cited by 7 publications

References 37 publications

Bottom‐up solutions in a time of crisis: the case of Covid‐19 in South Korea

Bottom‐up solutions in a time of crisis: the case of Covid‐19 in South Korea

Financing entrepreneurship in times of crisis: Exploring the impact of COVID-19 on the market for entrepreneurial finance in the United Kingdom

The impact of COVID-19 pandemic-Entrepreneurial Uncertainty and Effect on Economic Development

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