Introductory description

This is an elective module available for WBS and non-WBS students. To find detailed availability and to apply for this module, log in to my.wbs.ac.uk using your normal IT login details and apply via the my.wbs module application system. Once you’ve secured a place on my.wbs you should apply via your home department’s usual process, which usually takes place via eVision. Note that you do not require the module leader’s permission to study a WBS module, so please do not contact them to request it.

During the module we will look at issues affecting finance markets (debt and equity) for new ventures and small firms. These 'entrepreneurial' firms are typically informationally opaque and therefore find it harder to obtain finance than large firms. We will look at issues affecting the supply of entrepreneurial finance e.g., credit rationing and equity gaps; and issues affecting demand e.g., control aversion and entrepreneurial over-optimism.

There are three key stakeholder groups in entrepreneurial finance: entrepreneurs who want money to fund their ideas; finance providers (banks, angels, and venture capitalists), who want to make money from funding entrepreneurs; and government, which wants good entrepreneurs to receive funding and create jobs. The module therefore views entrepreneurial finance issues from the perspectives of entrepreneurs, finance providers, and government.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

• Introduction providing an overview of key issues including: the principal causes of financial constraints for new ventures; the role of financial intermediaries; the role of government support (British Business Bank); sources of entrepreneurial finance; the pecking order of entrepreneurial finances.
• The entrepreneurial context for new venture finance: What is an entrepreneur? What makes an entrepreneur?
• Evaluating new ventures for finance: venture capitalist and banker perspectives.
• Theory and evidence of credit rationing in new venture debt markets: Are entrepreneurs financially constrained?
• Developments in lending technologies for new ventures: Has the introduction of credit scoring for small business loans improved access to finance among new ventures? The role of asset finance and asset-based lending (invoice finance) in helping overcome financial constraints.
• Government intervention in new venture financial markets: The rationale for intervention: market failure. Is there a systemic market failure or is it restricted to particular types of business or capital? Examples of public assistance in new venture debt and equity markets (e.g., the Enterprise Finance Guarantee).
• Is there ethnic and/or gender discrimination in entrepreneurial finance markets?
• Developments in crowdfunding and peer-to-peer lending. Have these developments helped democratise entrepreneurial finance?
• Equity finance: Why are venture capital backed start-ups so rare; what are the rare qualities of these start-ups? What do venture capitalists do and how do they add value to their portfolio companies? How do venture capitalists value their portfolio companies?
• Harvesting equity investments.

Learning outcomes

By the end of the module, students should be able to:

• Discuss and evaluate the relevance of different sources of finance for the creation and performance of new ventures.
• Explain the relevance of entrepreneurial ventures for low, middle and high income economies.
• Recognise and question inequalities in venture financing and employ strategies to address them.
• Identify sources of finance available e.g. crowdfunding, bank loans, venture capital and business angels and critically evaluate these.
• Apply the analysis covered on the course to a number of genuine case studies.
• Recall and select relevant information.
• Demonstrate analytical and logical reasoning abilities.
• Evaluate information and draw a valid conclusion.
• Examine issues from different perspectives.

Indicative reading list

Bonini, S. and Capizzi, V., 2019. The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and
opportunities. Venture Capital, 21(2-3), pp.137-175.
British Business Bank, Small Business Finance Markets Reports, 2019-2023
Ferrati, F. and Muffatto, M., 2021. Reviewing equity investors’ funding criteria: A comprehensive classification and research
agenda. Venture Capital, 23(2), pp.157-178.
Fraser, S. (2019). Entrepreneurial Borrowing: Do Entrepreneurs Seek and Receive Enough Credit?, Foundations and Trends® in
Entrepreneurship, vol. 15, No. 5-6, 431-663.
Harrison, R.T. and Mason, C.M., 2019. Venture Capital 20 years on: reflections on the evolution of a field. Venture Capital, 21(1),
pp.1-34.
Kaartemo, V., 2017. The elements of a successful crowdfunding campaign: A systematic literature review of crowdfunding
performance. International Review of Entrepreneurship, 15(3), pp.291-318.
Mochkabadi, K. and Volkmann, C.K., 2020. Equity crowdfunding: a systematic review of the literature. Small Business Economics,
54, pp.75-118.

Subject specific skills

Analyse and evaluate the theory , evidence and practice relating to new venture financial markets.
Demonstrate a deep analytical understanding of how new venture financial markets operate.
Compare and consider how firms in the various financial sectors screen and evaluate new ventures for loan applications.
Provide financial screening and evaluation to a case study of a new venture.
Apply these specific knowledge and utilise these specialist skills in a direct and practical manner upon entering any of the new venture financial markets.

Transferable skills

Demonstrate written, mathematical and verbal communication skills.
Utilise and develop numeric and non-numeric skills.
Convey their understanding using an array of these forms of communication.
Design, evaluate and present entrepreneurial pitch decks based on the concepts/content/research discussed in the lecture.