The determinants of debt and (private-) equity financing in young innovative SMEs: evidence from Germany

Financial theory creates a puzzle. Some authors argue that high-risk entrepreneurs choose debt contracts instead of equity contracts since risky but high returns are of relatively more value for a loan-financed firm. On the contrary, authors who focus explicitly on start-up finance predict that entrepreneurs are the more likely to seek equity-like venture capital contracts, the more risky their projects are. Our paper makes a first step to resolve this puzzle empirically. We present microeconometric evidence on the determinants of debt and equity financing in young and innovative SMEs. We pay special attention to the role of risk for the choice of the financing method. Since risk is not directly observable we use different indicators for financial and project risk. It turns out that our data generally confirms the hypothesis that the probability that a young high-tech firm receives equity financing is an increasing function of the financial risk. With regard to the intrinsic project risk, our results are less conclusive, as some of our indicators of a risky project are found to have a negative effect on the likelihood to be financed by private equity

Credit and Private Equity Financing in Young Innovative Small and Medium-sized Companies in Germany

Successful newly established companies are a significant factor for the prosperous development of a national economy. Young innovative companies play a key role in the quick market launch and distribution of new technologies and products. As founders only rarely have sufficient own funds, financing has a considerable influence on the success of a newly established company. In the course of the investment boom in the USA and the breathtaking speed at which American Venture Capital (VC) companies listed their newly established portfolio companies in the stock market, the general attitude seems to be that a strong VC sector makes a significant contribution to the establishment of new companies and to innovation. However, it remains to be seen what role banks play in financing young technology companies. The analysis conducted by DIW together with the KfW bank group concerning the financing pattern of credit institutions and private equity companies in the sector of young technology companies is an initial contribution towards closing the gap in regard to the German market.1 The result of the analysis2 is that private equity is very likely to flow into investments bearing a higher financial risk. However, such clear statements cannot be made in connection with the economic performance risk _ possibly expressed in terms of innovation contents and objectives of the project. Many indicators for the economic performance risk _ this includes the company's R&D-orientation as well as various characteristics of the executed innovation projects _ proved to be insignificant or do not show the expected trend. Only the variable 'regular research and development' increases the likelihood of receiving private equity financing. The next step in the course of the research cooperation between DIW Berlin and the KfW bank group will be the quest for the causes of these unexpected findings.

The Determinants of Debt and (Private-) Equity Financing in Young Innovative SMEs: Evidence from Germany

Financial theory creates a puzzle. Some authors argue that high-risk entrepreneurs choose debt contracts instead of equity contracts since risky but high returns are of relatively more value for a loan-financed firm. On the contrary, authors who focus explicitly on start-up finance predict that entrepreneurs are the more likely to seek equity-like venture capital contracts, the more risky their projects are. Our paper makes a first step to resolve this puzzle empirically. We present microeconometric evidence on the determinants of debt and equity financing in young and innovative SMEs. We pay special attention to the role of risk for the choice of the financing method. Since risk is not directly observable we use different indicators for financial and project risk. It turns out that our data generally confirms the hypothesis that the probability that a young high-tech firm receives equity financing is an increasing function of the financial risk. With regard to the intrinsic project risk, our results are less conclusive, as some of our indicators of a risky project are found to have a negative effect on the likelihood to be financed by private equity.monetary policy rules, zero interest rate bound, liquidity trap, rational expectations, nominal rigidities, exchange rates, monetary transmission.Debt and equity financing, financial risk and project risk, venture capital and bank financing

An Architecture Description Language for Mobile Distributed Systems

Mobile software applications have to meet new requirements directly arising from mobility issues. To address these requirements at an early stage in development, an architecture description language (ADL) is proposed, which allows to manage issues like availability requirements, mobile code, security, and replication processes. Aspects of this ADL, Con Moto, are exemplified with a case study from the insurance sector

Architecture Description for Mobile Distributed Systems

In this paper we motivate an Architecture Description Language (ADL) for mobile distributed systems based on the π-calculus. Different from other approaches, the non-functional properties, which are essential when mobile architectures are described, are treated in a flexible manner by inserting logical formulae for expressing and checking non-functional properties into π-calculus processes. A formal example is given to illustrate the approach before the constituents of the ADL are sketched

\u3cem\u3eD\u3c/em\u3e-brane Charges in Gepner Models

We construct Gepner models in terms of coset conformal field theories and compute their twisted equivariant K-theories. These classify the D-brane charges on the associated geometric backgrounds and therefore agree with the topological K-theories. We show this agreement for various cases, in particular, the Fermat quintic

Die Frequenz der Studierenden an der Universität Tübingen 1760-1962

Das Universitätsarchiv Tübingen verwahrt unter der Signatur UAT 117/142a eine Registraturakte des Akademischen Rektoramts, welche als Quadrangel 17 auch eine im Wintersemester 1909/10 angelegte handschriftliche Frequenzstatistik mit dem Titel „K Universität Tübingen / Besuch der Universität durch immatrikulierte Studierende von 1760 –“ enthält. Das Verzeichnis wurde bis zum Sommerhalbjahr 1962 fortgeführt