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Financing Frictions in High-Potential Entrepreneurship

Project description

Access to capital is biggest hurdle for new entrepreneurs

More entrepreneurs are needed to create new jobs and promote growth in Europe. The EU’s Entrepreneurship 2020 Action Plan is a blueprint for action to unleash Europe’s entrepreneurial potential. However, access to capital is one of the biggest hurdles to starting and growing a business. The EU-funded Financing_Entrep project will study the financing frictions that are hindering entrepreneurship in Europe. Specifically, the project will review the financing sources and constraints facing high-potential entrepreneurs and SMEs. Efforts will be made to develop adaptations to venture capital’s funding model. Further, it will investigate possible impacts of capital markets policy on emerging clusters of frontier technologies.

Objective

Entrepreneurship is widely accepted as a key driver of economic growth and is a central policy priority across the world, including in the EU through initiatives such as the EUs Entrepreneurship 2020 Action Plan.

While access to capital is viewed as one of the biggest hurdles to starting and growing a new business, the manner in which financing constraints for startups are invoked in academic work and policy frameworks is often poorly fleshed out. This lack of clarity is also reflected in the way policy makers sometimes invoke images of Silicon-Valley-type venture capital (VC) backed entrepreneurship when proposing reforms that are tailored towards small businesses with low growth potential. My ERC CoG project aims to quantify and address financing frictions facing high potential entrepreneurship through three related areas of inquiry:

1. Characterizing the financing sources and constraints facing high-potential entrepreneurs and small and medium sized enterprises (SMEs) that are responsible for driving employment and productivity growth in the economy.

2. Developing adaptations to venture capitals funding model to overcome specific financing hurdles facing the translation and scale-up of science-based tough tech ventures.

3. Understanding the dynamics of agglomeration in emerging industries, with a particular focus on how capital markets policy can impact where clusters of frontier technologies emerge.

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Keywords

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Programme(s)

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Topic(s)

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Funding Scheme

Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.

ERC-COG - Consolidator Grant

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Call for proposal

Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.

(opens in new window) ERC-2019-COG

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Host institution

IMPERIAL COLLEGE OF SCIENCE TECHNOLOGY AND MEDICINE
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 1 590 330,00
Address
SOUTH KENSINGTON CAMPUS EXHIBITION ROAD
SW7 2AZ London
United Kingdom

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Region
London Inner London — West Westminster
Activity type
Higher or Secondary Education Establishments
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Total cost

The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.

€ 1 590 330,00

Beneficiaries (1)

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