Entrepreneurial Finance

Overview of the field

Here you can find quite a few review papers by finance, management, and entrepreneurship scholars that summarize the field of entrepreneurial finance. 

• Drover, W., Busenitz, L., Matusik, S., Townsend, D., Anglin, A., & Dushnitsky, G. (2017). A review and road map of entrepreneurial equity financing research: Venture capital, corporate venture capital, angel investment, crowdfunding, and accelerators. Journal of Management, 43 (6), 1820-1853.

This paper identifies 418 articles in the top 16 journals between 1980 and 2016. 1980-2003 represents the emergence of this field, while the work of 2004-onwards is the main review focus of this paper. Early work in this field was mainly descriptive. It then identifies VC research at the individual level (VC, entrepreneurs, and the dyad between these two), the organizational level ( risk-mitigating through staging, contractual terms, co-syndication, intermediation in deal selection, and value-adding, the certification effect of VC), and the market level (exogenous factors such as institution and culture, country-level outcomes); it also reviews CVC and business angels work at three levels. It points to important avenues for future research at each specific sub-topic and overall recommendations for future research. 

• Cumming, D., & Johan, S. (2017). The problems with and promise of entrepreneurial finance. Strategic Entrepreneurship Journal, 11 (3), 357-370.

This paper uses Google citation data of journal articles on entrepreneurial finance topics covering venture capital, private equity, private debt, trade credit, crowdfunding, and IPOs (16 top journals between 2000 and 2016) to demonstrate the field's development. It comments on the identified segmentation between finance and the entrepreneurship/management field and highlights a few areas for future research.  Questions include the difference in VC and PE contracts across countries, the relation between cultural and legal settings to explain investment outcomes, investment terms and contracts in angel investments and private debt investments,  the complementarity and supplementation among different forms of investors, and gender and racial biases in investments. It also points to a few key questions on the academic development of this field.  

• Cumming, D., & Groh, A. P. (2018). Entrepreneurial finance: Unifying themes and future directions. Journal of Corporate Finance, 50, 538-555.

It took a similar approach to the paper above and introduced the papers in the special issue by contextualizing the ENT finance papers in the broader literature groups. 

• Denis, D. J. (2004). Entrepreneurial finance: an overview of the issues and evidence. Journal of corporate finance, 10(2), 301-326.

This is one of the earlier papers that reviews the field. It included four topics: (i) alternative sources of capital, (ii) financial contracting issues, (iii) public policy issues, and (iv) risk and return in private equity investments. Regarding alternative sources of capital, it covers VC, angels, and CVC; regarding financial contracting issues, it covers studies on types of securities and covenants in contracting and ownership and controls; regarding public policy, it discusses taxation and stock market development. 

accelerators

• Crișan, E. L., Salanță, I. I., Beleiu, I. N., Bordean, O. N., & Bunduchi, R. (2021). A systematic literature review on accelerators. The Journal of Technology Transfer, 46, 62-89.

This paper identifies 98 articles, 78 of which focus on accelerators, and the rest cover accelerators as part of the topic. It looked at accelerator definition and context (categorized as start-up-focused, government, corporate, university, and community). It identified different types of interventions and outcomes for start-ups with four distinctive mechanisms. It concluded with avenues for future research on accelerators. 

Crowdfunding

• Estrin, S., Gozman, D., & Khavul, S. (2018). The evolution and adoption of equity crowdfunding: Entrepreneur and investor entry into a new market. Small Business Economics, 51, 425-439.

It introduces the evolution of the equity crowdfunding market in the UK.

Theoretical Perspectives - Management field

• Colombo, O. (2021). The use of signals in new-venture financing: A review and research agenda. Journal of Management, 47(1), 237-259.

Signaling theory: This paper reviews the use of entrepreneurial signaling in new venture resource acquisitions. It identifies and summarizes research findings regarding signaling in the context of crowdfunding, business angels, VCs, and other equity investors and provides avenues for future research. 

• Fisher, G., Kotha, S., & Lahiri, A. (2016). Changing with the times: An integrated view of identity, legitimacy, and new venture life cycles. Academy of Management Review, 41(3), 383-409.

Identity and Organizational Legitimacy: This paper examined how a technology venture's organizational identity must adapt to meet the expectations of critical resource providers at each stage of its organizational life cycle.

• Zahra, S. A. (2021). The resource-based view, resourcefulness, and resource management in startup firms: A proposed research agenda. Journal of Management, 47(7), 1841-1860.

Resource-based view: It discusses how RBV can be applied to the start-up context and questions some key assumptions in RBV. 

• Clough, D. R., Fang, T. P., Vissa, B., & Wu, A. (2019). Turning lead into gold: How do entrepreneurs mobilize resources to exploit opportunities?. Academy of Management Annals, 13(1), 240-271.

Resource mobilization of entrepreneurs: it calls for more theory unification within the entrepreneurial resource mobilization literature and across contiguous conversations in strategy and organization theory.

Books 

• Da Rin, M., & Hellmann, T. (2020). Fundamentals of entrepreneurial finance. Oxford University Press.

This is an introductory book suitable for students and those who are new to the topic. It covers topics like evaluating opportunities, financial projection, ownership and returns, various valuation methods, term sheets, how to structure deals, corporate governance in start-ups, staged financing, debt financing, and exit. 

By REGION - Europe

• Revest, V., & Sapio, A. (2012). Financing technology-based small firms in Europe: What do we know? Small Business Economics, 39, 179-205.

It identifies that European TBSFs finance new investments by relying primarily on internal funds. It also identified evidence of the European market's underdevelopment compared to the US market.