Our paper Do investors and entrepreneurs match? – Evidence from the Netherlands and Sweden has been accepted for publication at TFSC!
Abstract: Entrepreneurs and investors face challenges in the ‘thin market’ for early stage entrepreneurial finance. Improving this situation has been a priority of policy makers for at least a decade, however, the challenges in this matching process are still poorly understood. Theory suggests that matching problems may originate in different perceptions in areas such as evaluation criteria, risk and risk management by investors and entrepreneurs. To find a good match it seems essential to understand what is important to your counterpart. Based on a mixed methods approach using data collected in semi-structured interviews and a survey with both entrepreneurs and investors mostly active in green tech innovation, this study systematically analyses where their perceptions deviate and where frictions in the matching process may occur. We find that a mismatch exists in the perception of risk, the importance attached to risk, the search channels used to find a potential partner and the evaluation criteria applied in evaluating a proposition (i.e., exit, innovativeness, capabilities of teams). This paper suggests that increasing market transparency and creating a mutual understanding of the investment process will prevent potentially damaging perception misalignment from arising in the first place.
Download pre-print (free)
Happy to see that our INNOPATHS homepage is now online: www.innopaths.eu
Finally published: Our work on financing cleantech innovation through VC/PE.
In recent years, scholarly interest in financing for innovation has grown, particularly for mitigating climate change. However, extant literature has neglected the interaction of actors along the equity financing value chain, and the indirect effects of innovation and financial policy on the supply and demand of private equity (PE) and venture capital (VC). In this paper, we emphasize the importance of these understudied aspects through a comparative case study of equity finance for cleantech in the United States and Germany. We find that systemic interdependencies between institutional investors, VC/PE and policy makers influence the conditions for innovation – the ‘finance-innovation-policy nexus’. Adverse effects of policies affecting financial markets, in particular institutional investors, have to be taken into account to effectively mobilize private investments for (cleantech) innovation.
Download the preprint here
Access the postprint here
New working paper based on my PhD research published:
This paper analyses the field of innovation studies regarding barriers to low-carbon innovation and consequences for finance. It attempts to integrate previously separated literatures, bridge the gap between abstract failures and tangible barriers and add a temporal perspective to allow for more differentiated policy responses. Among the most salient problems for the commercialisation and diffusion of clean technologies, scholars have highlighted the financing environment. A complex set of barriers therefore revolves around the question of how to finance companies, projects and infrastructure based on low-carbon innovation. The paper contributes to a holistic understanding of the underlying mechanisms. A combination of technological barriers combined with economic barriers, institutional and political barriers contribute to thin financial market for low-carbon innovation all along the innovation cycle. Policy makers can chose from a variety of measures address these barriers and mobilise private finance. Avenues for future research relating to financing low-carbon innovation and corresponding policies are depicted.
My dissertation project published as a book:
The author analyses how finance flows can be guided towards low-carbon value generation and growth. He investigates the arrangements between actors in the innovation system and policy measures such as technology push, demand-pull and regulation with regard to their influence on private investments. The case studies include innovation intermediaries, energy service contracting for LED lighting and renewable energy project finance. The results show that barriers to low-carbon innovation inhibit the financing for companies, projects and infrastructure. Also, transparent structures which focus on risk and return facilitate private investments and, finally, both science, technology and innovation policies and regulation are needed to spur private finance.
Order here: PeterLang Publishers