Financing Frictions in High-Potential Entrepreneurship

Entrepreneurship is widely accepted as a key driver of economic growth and is a central policy priority across the world, including in the EU through initiatives such as the EUs Entrepreneurship 2020 Action Plan.While access to capital is viewed as one of the biggest hurdles to starting and growing a new business, the manner in which financing constraints for startups are invoked in academic work and policy frameworks is often poorly fleshed out. This lack of clarity is also reflected in the way policy makers sometimes invoke images of Silicon-Valley-type venture capital (VC) backed entrepreneurship when proposing reforms that are tailored towards small businesses with low growth potential. My ERC CoG project aims to quantify and address financing frictions facing high potential entrepreneurship through three related areas of inquiry: 1.Characterizing the financing sources and constraints facing high-potential entrepreneurs and small and medium sized enterprises (SMEs) that are responsible for driving employment and productivity growth in the economy.2.Developing adaptations to venture capitals funding model to overcome specific financing hurdles facing the translation and scale-up of science-based tough tech ventures.3.Understanding the dynamics of agglomeration in emerging industries, with a particular focus on how capital markets policy can impact where clusters of frontier technologies emerge.