The Evolving Entrepreneurial Finance Landscape

• Author: Chris Zott,,Rajshree Agarwal,Mike Wright,Tom Lumpkin
• Date: 01 September 2016
• Published date: 01 September 2016
• DOI: http://doi.org/10.1002/sej.1232

THE EVOLVING ENTREPRENEURIAL

FINANCE LANDSCAPE

MIKE WRIGHT,

1,2

* TOM LUMPKIN,

3

CHRIS ZOTT,

4

and RAJSHREE AGARWAL

5

1

Center for Management Buyout Research, Imperial College Business School,

London, U.K.

2

University of Ghent, Ghent, Belgium

3

Price College of Business, Universityof Oklahoma, Norman, Oklahoma, U.S.A.

4

IESE Business School,Barcelona, Spain

5

Robert H. Smith School of Business, University of Maryland, College Park,

Maryland, U.S.A.

INTRODUCTION

The entrepreneurial finance landscapeis experiencing

profound changes. No longer is the focus only on

business angels (BAs) and venture capital (VC).

Indeed, venturecapital only ever applied to a minority

of cases and the growth in its research attention

probably owed more to the increasing availability of

databases than to its applicability to vast swathes of

entrepreneurial ventures. The articles presented in this

themed issue and summarized in Table 1 address a

number of dimensions of this evolving landscape.

Some articles provide new insights into the

investment processes of established fund providers.

This includes the role of social ties in understanding

a more fine-grained view of the early stage in the

process of deal screening by venture capital firms

(VCs) (Wang), the nature of interorganizational

relationships between investors and portfolio

companies in the particular context of corporate

venture capital (CVC) (Weber, Bauke, and Raibule),

and the role of ethnicity in cross-border VC investment

(Zhang, Wong, and Ho). Other articles explore some

of the emerging forms of entrepreneurial finance, such

as venture debt (de Rassenfosse and Fischer) and

informal debt (Wu, Si, and Wu). The articles also

cover different contexts, from emerging to developed

markets.

In what follows, we consider these articles in the

wider context of the changing landscape of

entrepreneurial finance (as summarized in Figure 1)

and suggest areas for extending the research agenda.

FORMS OF FINANCE

Debt has been the focusof attention for much research

and policy concerning small businesses. While these

firms are typically reluctant to give up equity, their

borrowing capacity may be limited by a lack of

tangible assets for collateral and irregular cash flows

to service interest payments. As such firms are likely

to be turned down by banks, they oftentimes become

discouraged borrowers, reluctant or unable to access

the financing they need to grow (Fraser, Bhaumik,

and Wright, 2015).

The 2008-09 financial crash in particular, and its

impact on the availability of traditional bank

financing, has given impetus to the development of

new forms of debt forentrepreneurial ventures. These

developments include peer-to-peer lending through

crowdfunding platforms as well as venture debt.

Venture debt lendinglies at the intersection of venture

Keywords: entrepreneurial finance; crowdfunding; venture debt;

informal debt;emerging economies

*Correspondence to: Mike Wright, Imperial College Business

School, Imperial College London, Tanaka Building, South

Kensington Campus, London, U.K. SW7 2AZ. E-mail: mike.

wright@imperial.ac.uk

Strategic Entrepreneurship Journal

Strat. EntrepreneurshipJ.,10:229–234 (2016)

Published onlinein Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej

Copyright © 2016 Strategic Management Society

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