Risk financing for knowledge-intensive entrepreneurship: Brazilian framework and an empirical analysis

• Grant number: 16/24784-9
• Support Opportunities: Scholarships in Brazil - Doctorate (Direct)
• Effective date (Start): February 01, 2017
• Effective date (End): December 31, 2019
• Field of knowledge: Interdisciplinary Subjects
• Principal Investigator: Nicholas Spyridon Vonortas
• Grantee: Irineu de Souza Lima Júnior
• Host Institution: Instituto de Geociências (IG). Universidade Estadual de Campinas (UNICAMP). Campinas , SP, Brazil
• Associated research grant: 13/50524-6 - Innovation systems, strategies and policies, AP.SPEC

Abstract

Knowledge-Intensive Entrepreneurship (KIE) is recognized to be an important source of productivity, innovation, dynamism and flexibility. The literature describes the necessity to build a holistic "ecosystem" to nurture the development of KIE. This ecosystem includes funding, technical knowledge, mentorship, market linkages, skilled labor force, specific business rules and others. Policymakers have been increasing attention in financing for KIE, in particular to the so-called "valley of death" that frequently engulfs new enterprises between invention to innovation. This refers to the funding gap that exists between initial funds - typically provided by personal assets or government agencies - and large investments which support the development of an idea to get to an innovation. This gap is usually bridged by risk financing through equity, debt or by government programs specifically constructed for this purpose. In addition, to develop an efficient system of risk finance it is important to understand the KIE's funding requirements. The capital structure (i.e. the way firms choose to finance their business) has a central role in firm's ability to survive. Hence, this study tries to address both the supply-side and the demand-side of risk financing for KIE. First, we intend to analyze the Brazilian system of risk financing throughout an exploratory study, identifying and analyzing its main institutions, policies, instruments, and regulatory framework. In addition, we propose to use the U.S. framework of risk finance for KIE as a guide to this analysis. Second, we intend to empirically verify the determinants of capital structure of two different sets of firms: Unicamp's spin-offs and a specific group of academic spin-offs from Maryland, U.S. (AU)