87524 - Financing Innovation: JVS, Venture Capital and Crowdfunding

Learning outcomes

Successful innovation involves convincing others to provide the resources needed to implement new ideas. The course is aimed at providing the fundamentals of innovation financing, from the perspective of new and small firms, by integrating theory with empirical studies and case-studies. At the end of the course students will gain an understanding of the determinants of the choice among different financing models and achieve a good command of the best practices in the successful implementation of innovative ideas. In relation to Joint Ventures (JVs), students will focus their attention on the possibility for small firms to engage in a business agreement with other firms for the purpose of developing innovative projects. For the case of venture capital financing, students will be introduced from a comparative perspective to the procedures followed by venture capital firms when financing start-ups and early stage ventures. As for crowdfunding, students will learn about four different models: reward, equity, P2P lending, and charity.

Course contents

The course balances learning of concepts, development of analytical skills and practice in the financial management of start-ups, JVs, and SMEs involved in innovative activities. Besides focusing on some distinctive features of innovation financing from the perspective of the firm, the course explores this issue also from the perspective of investors. On the one side, it highlights strengths and weaknesses of ‘control rights’ theories of financing, in which firms follow an established hierarchy of preferences for modes of financing. On the other side, it discusses strengths and weaknesses of public policies supporting the creation of new technology-based firms and the formation of Research Joint Ventures (RJVs). The topics and practical approaches will consider the unique differences between developing the entrepreneurial free-standing business and the corporate intrapreneurial development of new divisions, business units or product lines within a parent organization.

Readings/Bibliography

Lerner, J., A. Leamon and F. Hardymon (2012). Venture Capital, Private Equity, and the Financing of Entrepreneurship. Wiley;

Acs, Z., D.B. Audretsch, P. Braunerhjelm and B. Carlsson (2009). The Knowledge Spillover Theory of Entrepreneurship. Small Business Economics, 32(1): 15-30;

Casson, P.D., R. Martin and T.M. Nisar (2008). The Financing Decisions of Innovative Firms. Research in International Business and Finance, 22(2): 208-221;

Lee, A. (2013). Welcome to the Unicorn Club: Learning from Billion-Dollar Startups. TechCrunch, 2 November;

Mollick, E. (2014). The Dynamics of Crowdfunding: An Exploratory Study. Journal of Business Venturing, 29(1): 1-16;

Rossi, A. and S. Vismara (2018). What Do Crowdfunding Platforms Do? A Comparison Between Investment-based Platforms in Europe. Eurasian Business Review, 8(1): 93-118;

Signori, A. and S. Vismara (2018). Does Success Bring Success? The Post-offering Lives of Equity-crowdfunded Firms. Journal of Corporate Finance, 50: 575-591.

Teaching methods

Lectures, class discussions, coursework.

Assessment methods

Students who choose to actively participate in the course will take a two-part exam, and the grade obtained in each part will contribute 50% to the final grade. The first part (coursework) involves preparing a 10-15 minute video in which the strengths and weaknesses of a research paper published in an international scientific journal are presented and discussed. Each video will be created in collaboration by at least two students. The papers will be made available to the students at the beginning of the course. The second part consists of a written final exam in which students will have to answer 5 out of 8 (both open-ended and multiple-choice) questions.

For students unable to attend the classes, the final exam will consist of 8 open-ended questions and 4 multiple-choice questions that they will have to answer.

Grading criteria:

18-23: the student has sufficient preparation and analytical skills, spread however, over just few topics taught in the course, the overall jargon is correct

24-27: the student shows and adequate preparation at a technical level with some doubts over the topics. Good, yet not to articulate analytical skills with the use of a correct jargon

28-30: Great knowledge about most of the topics taught in the course, good critical and analytical skills, good usage of the specific jargon

30L: excellent and in depth knowledge of all the topics in the course, excellent critical and analytical skills, excellent usage of specific jargon.

Teaching tools

Teaching tools

Other teaching material, including slides used during the lectures and papers will be made available to students on a weekly basis through the 'Virtuale' platform.

Office hours

See the website of Enrico Santarelli