Dokument: Essays on Venture Lending as Alternative Source of Funding for Innovative Ventures

Titel:	Essays on Venture Lending as Alternative Source of Funding for Innovative Ventures
URL für Lesezeichen:	https://docserv.uni-duesseldorf.de/servlets/DocumentServlet?id=41318
URN (NBN):	urn:nbn:de:hbz:061-20170324-081145-4
Kollektion:	Dissertationen
Sprache:	Englisch
Dokumententyp:	Wissenschaftliche Abschlussarbeiten » Dissertation
Medientyp:	Text
Autor:	Hesse, Mischa [Autor]
Dateien:	[Dateien anzeigen] Adobe PDF [Details] 745,3 KB in einer Datei [ZIP-Datei erzeugen] Dateien vom 23.03.2017 / geändert 23.03.2017
Beitragende:	Prof. Dr. Lutz, Eva [Gutachter] Prof. Dr. Schwens, Christian [Gutachter]
Dewey Dezimal-Klassifikation:	300 Sozialwissenschaften, Soziologie » 330 Wirtschaft
Beschreibungen:	Die folgende Dissertation beschäftigt sich mit dem Thema Venture Lending als alternative Finanzierungsform für junge Unternehmen und analysiert Faktoren, die die Vertragsgestaltung beeinflussen und welche Ziele und Motive die Vertragsparteien verfolgen und sich gegenseitig beeinflussen. This thesis supports the understanding of venture lending by analyzing factors that influence the contract design and indicate effects of the financing instrument on the involved parties. This dissertation concentrates on three major contributions to the current entrepreneurial finance literature. Chapter B “Liquidity Runway and Horizon of Disappointment: Business Model of Venture lending” theoretically examines the venture lending business model, the behavior of the involved parties, and their aims regarding this financing instrument. I underline the results by using a proprietary dataset and reveal the underlying interdependencies between venture lenders, venture capitalists, and the start-ups. Intellectual property and the venture capitalist involvement is crucial in the venture lending business model. Risk reduction instruments applied by the venture lender are presented, which can mitigate the financing risks and stem from the lack of conventional securities. I contribute to the current literature by revealing the applied risk reduction instruments in venture lending contracts, which we can underline with empirical data from actual venture lending contracts. Additionally, I highlight the importance of the investment behavior of venture capitalists and under which circumstances they will invest further in those deals. In Chapter C “Patent Activity of Start-ups and the Structuring of Venture Lending Contracts”, I analyze the impact of patents on venture lending contracts. Interview-based and choice-based experiments point out that the intangible assets in venture lending contracts could serve as security for the venture lender. I even go beyond this and analyze how the intangible assets can influence capital costs in venture lending contracts. The presence of at least one granted or pending patent negatively influences direct (credit spread) and indirect (warrant coverage) costs of venture lending contracts. The presence of patents conveys information and signals quality to the payoff distribution of the venture loans. I analyze how the development stage of a company also influences the relation between capital costs and patents in these deals. We point out that the company development stage negatively influences the relation between patents and capital costs, i.e., in later stages patents seem to represent a less relevant quality signal than in earlier stages. Patents are especially of high relevance in early stage companies as they can reduce information symmetries between the venture lender and the start-ups. Chapter C contributes to the current literature in three fields. First, the literature on venture lending by contributing an empirical analysis about the influence of patents on capital costs is extended. Second, I contribute and extend the patent signaling literature. Patent signaling is also existent in venture lending and indicates that patents signal quality not only to equity investors, but also to venture lenders. As a consequence, patents can convey positive related information in this context and show they can reduce information asymmetries for venture lenders, which focus on the reduction of downside risks. Patents are more important for companies in earlier stages than in later stages, which highlights the relevance of asymmetric information in venture lending contracts. Third, this analysis extends the literature on entrepreneurial finance by revealing and analyzing a financing instrument, which enables young and innovative companies to receive debt financing under certain conditions. Chapter D “Venture Capitalist Reputation and the Effect on Venture Lending Contracts” examines interdependencies between financial intermediaries, such as venture capitalists and venture lenders, and how this relation can influence financial contracting. In particular, I investigate whether venture capitalist reputation has an influence on the venture lending contract design. The importance of venture capitalist has been shown by theoretical and choice-based studies, but there has been no empirical evidence on this topic. Foremost, I go one step further and analyze whether venture capitalist reputation influences actual venture lending contracts, regarding capital costs and the timing and show immediate effects of venture capitalist reputation. Venture capitalist reputation negatively influences capital costs in venture lending contracts. This can be explained by reduced information asymmetries and positive signal sent by the reputation to the venture lender. The highest influence on capital costs is shown by the lead venture capitalist’s reputation. The timing of the venture loan issuance is affected by the venture capitalist reputation. A higher venture capitalist reputation leads to a shorter duration between the last venture capital round and the venture loan issuance. Highly reputable venture capitalists have more investment opportunities and might force the venture lenders and start-ups to issue the venture loan earlier, after the last venture capital round, to avoid dilution, whereby low reputable venture capitalists might try to postpone the venture loan to invest more of their own equity. Chapter D contributes to the current literature in several ways. Besides long-run performance effects, venture capitalist reputation can also finance contracts from venture lenders and affect contract details and, therefore, immediate performance. Consequentially, the affiliation with highly reputable venture capitalists can reduce capital costs on venture lending deals, which counteracts higher costs that are usually imminent in equity rounds of reputable venture capitalists, due to the higher equity share they gain (Hsu, 2004). Second, I extend the current literature on relationship lending and contribute new findings to this field of research. Relationship lending literature focuses mainly on the relation between banks and companies and the direct interaction between these two parties. I suggest a relationship triangle, which indicates the relation between venture lenders and start-ups is also affected by venture capitalists. Third, the literature on signaling theory is extended. Venture capitalist reputation can convey positive signals to another financial intermediary, such as venture lenders. As a consequence, this reputation directly influences financial contracting between venture lenders and start-ups. In summary, this dissertation extends the current entrepreneurial finance literature by contributing new empirical insights in the fields of venture lending and venture capital. Patents and the venture capitalist reputation are of high relevance in venture lending deals and emphasize the complicated character of this specialized debt financing instrument.
Lizenz:	Urheberrechtsschutz
Fachbereich / Einrichtung:	Wirtschaftswissenschaftliche Fakultät
Dokument erstellt am:	24.03.2017
Dateien geändert am:	24.03.2017
Promotionsantrag am:	13.09.2016
Datum der Promotion:	20.12.2016