Constructing Optimal Solution in Financing Entrepreneurial Venture: From Banks To Venture Capital

Abstract

The overall aim of the master thesis is to provide detailed solution for the problem of entrepreneurial choice of financing. In addition, the goal of the research includes detailed description of actual relationship between equity and debt financing of new venture. To complete the stated aim the following tasks were performed: the peculiarities and nature of new ventures were analyzed, (from theoretical point of view and empirical data derived from US market), an overview was given with focus on debt and equity financing as well as adoptability of long and short-term Venture Capitalist’s and borrower relations, taking as an example VC contracts and Bank contracts as a financing of innovative projects, modeling interpretation was made for project finance staging, and parameter’s simulation was implemented, afterwards by the use of regression analysis author tested the derived hypothesis. In the final part of the master research, the expected outcomes are covered and hypothesis that investigate different areas of contractual problems derived. As a result of the study, the balance between investor and entrepreneur sources of capital, with equilibrium solution in financing new venture was revealed. In conclusion the author gives discretional analysis of key insight startup financing process, managerial and policy recommendations regarding attracting financial institutions for project funding and areas for future academic research in that sphere.