Wilson, N orcid.org/0000-0001-5250-9894, Wright, M and Kacer, M orcid.org/0000-0002-3544-0327 (2018) The Equity Gap and Knowledge-based Firms. Journal of Corporate Finance, 50. pp. 626-649. ISSN 0929-1199
Abstract
The equity gap, the difference between the amount of (risk) capital that would be invested under conditions of well-informed and competitive markets and the amount of capital actually invested, covers both startups and ventures moving beyond startup to the establishment and early growth phase. We provide estimates for the size of the equity gap for firms facing later stage financing issues, the second equity gap. This ‘second’ equity gap relates to a second so-called ‘valley of death’ in financing the growth phase, and is particularly pertinent for knowledge-intensive (KI) firms. We utilize a unique panel database covering the population of limited companies, which includes 2852 VC backed companies and 4048 deals. Using propensity scoring methods and multivariate models determining investment demand we screen the corporate population for potential VC investments and estimate the size of the equity gap in total and the KI firms that face, potentially, the second equity gap as a subset of our total estimates.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 Elsevier B.V. This is an author produced version of a paper published in Journal of Corporate Finance. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Equity gap, Venture capital, Knowledge intensive firms |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 12 Dec 2017 12:41 |
Last Modified: | 07 Jul 2019 00:43 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jcorpfin.2017.12.008 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:125087 |