Financing risk and innovation
By: Ramana Nanda, Matthew Rhodes-Kropf
Contributors: Rhodes-Kropf, Matthew; Harvard Business School
Edition: 2nd rev.
Series: Working paper / Harvard Business School -- 11-013; Working paper (Harvard Business School) -- 11-013.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 50
Description: Technological revolutions and waves of creative destruction are associated with new ventures and the destruction of mature firms, but also with the failure of numerous startups, suggesting a time of increased experimentation in the economy. We provide a model of investment into new ventures that demonstrates why some places, times and industries should be associated with a greater degree of experimentation by investors. Investors respond to increases in the forecasted probability of future funding by funding more innovative ideas. We propose that extremely novel technologies may need 'hot' financial markets to get through the initial period of discovery or diffusion.
Notes: "August 2010, revised March 2011, December 2011" -- Publisher's website.

"December 22, 2011" -- added t.p.

Includes bibliographical references.