创业融资中英文对照外文翻译文献.docx

创业融资中英文对照外文翻译文献.docx

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创业融资中英文对照外文翻译文献

创业融资中英文对照外文翻译文献

（文档含英文原文和中文翻译）

原文：

EntrepreneurialFinancing

Thefinancingofstartupsentailspotentiallyextremeadverseselectioncostsgiventheabsenttrackrecordofthefirmsseekingcapital,andgiventheriskynatureoftheindustriesinwhichmanyofthemoperate.Exacerbatingtheproblem,thisscenarioofteninvolvesaninnovatorwhohasextensivetechnicalknowledgebuthasneithertheaccumulatedreputationnorthebondablewealthnecessarytoconveythisinformationcredibly.

Barrycharacterizesventurecapitalashavingevolvedpreciselytofillthisstartupfinancingniche:

Atthelevelofsmall,riskyventures,accesstocapitalmarketsisrestricted.Notallentrepreneurscanself-financetheirprojects,andnotallcanfindbankersorangelswhowillcarrytheshortfall.Venturecapitalistsofferthemasourceoffundsthatisspecificallydesignedforuseinriskysettings.Theventurecapitaliststhemselvesperformduediligencepriortoinvesting,andinformationgleanedinthatprocesscangreatlyreducetheadverseselectionproblem..

Thisoutlookraisesseveralquestions.Whyisitassumedthatbankscannot（orchoosenotto）performthesamelevelofduediligenceasventurecapitalists（VCs）?

Inwhatsenseisventurecapital“designed”forriskysettings?

ThepuzzledeepenswhenonenotesthatstraightdebtistypicallyadvocatedasasolutiontotheadverseselectionproblemwhereasinpracticeVCsoftenholdconvertiblepreferredequity.Indeed,adefiningcharacteristicoftheventurecapitalmarketisthatcontractsarefairlyhigh-poweredinthesensethatexpectedpayoffscomedisproportionatelyfromtheequitycomponentor“upside”.

ThesequestionscanbeaddressedbyreflectinguponthecostlyduediligencetowhichBarryrefers.Bydirectlyrevealingtheproject’squality,duediligencereducesinformationasymmetrybetweenentrepreneursandtheVC.Bycontrast,ifqualityweresignaled—thetraditionalsolutiontotheadverseselectionproblem—costlyduediligencewouldbeunnecessarysincetherewouldbenomoreinformationtoconvey.Inotherwise,eithersignalingorcostlyduediligencecansolvetheadverseselectionproblem.Thetwomechanismsaresubstitutes;thequestionthenbecomeswhichismorecost-effective.

Thefirstcontributionofthepaperistoshowthatsignalingcanbeprohibitivelyexpensiveinentrepreneurialfinancingmarkets,andsocostlyduediligencedominates.The“cost”ofsignalingisdrivenbytheincentivesofbadfirmstopool.Yet,forstartups,iffundingisnotobtainedthenthefirmmayhavealmostnovalue.Withsuchlowreservationvalues,badentrepreneursattempttopoolatnearlyanycost.Astheanalysisshows,securitiesisunattractiveenoughtodriveoutbadentrepreneurs—andthustoserveasacrediblesignal—tendtobeunattractivetogoodentrepreneursaswell.Costlyduediligenceemergesasthepreferredsolution.

Astestamenttotheempiricalimportanceofduediligencecostsinventurecapitalmarkets,FriedandHanscharacterizetheVCfundingprocessascomposedofsixdistinct,progressivelyrigorousstagesofscreening.Thisduediligencetakesanaverageof97daystocompleteevenbeforethefirstroundoffundingisinitiated.Themajorityoffundingproposalsdonotsuccessfullypassthroughthefirstscreen,letalonesubsequentscreens,andthefullprocessisdescribedas“muchmoreinvolvedinbankloanreviews.

Thesecondcontributionofthepaperistoillustratealinkbetweencostlyduediligenceandhigh-powered（orequity-like）financialcontracts.Theintuitionbehindthislinkissimple.Bydefinition,low-poweredcontractsaresafe;i.e.,expectedpayoffsvarylittleacrossfirms.High-poweredcontractsmagnifythedifferentialinpayoffbetweenfundinggoodandbadprojects,andhencemagnifytheincentivestoscreenoutbadprojects.Ineffect,high-poweredcontractsmaketheVCbearthecostofchoosingentrepreneursunwisely.Thereforehigh-poweredcontractsencourageduediligence.

Tosummarize,thismodelisdesignedtomakethreesimplepoints:

（1）upsidesharingistobeexpectedgivencostlyevaluation,

（2）suchcostlyevaluationsserveasasubstitutetraditionalsolutionstotheadverseselectionproblem,and（3）traditionalsolutionsaredominatedforparameterizationsofthemodelthatcorrespondtoventurecapitalmarkets.

Followingthepath-breakingempiricalworkofSaar,atheoreticalliteratureonVCcontractdesignemerged.Onecommonfeatureofthesepapersisthattheyrationalizetheoptimalityofconvertiblesecurities.Asecondcommonfeatureofthesemodelsistheadmissionofagencycosts.Forexample,VCsandentrepreneursmayhavedifferentpreferencesregardingprojectriskorexitstrategy.

Inpart,theliterature’srelianceonagencycostsowestoawidespreadbeliefintheirempiricalrelevance.Itisalsopresumablyrelatedtotheaforementionedconsensus:

sincedebtisconsideredtheoptimalresponsetoadverseselection,non-debtsecuritiesmustimplythepresenceofanothermarketfriction.Ontheotherhand,itisclearhowagencycostscouldleadtoequity-likesecurities.Conflicts-of-interestoverfutureactionsaremitigatedbygrantingbothpartiesroughlysymmetricalpayoffs,whichleadstoupside-sharing.Ofcourse,theomissionofagencyproblemsfromthecurrentmodelisnotintendedtosuggestthattheyareunimportantempirically.Rather,thelessonisthatagencycostsarenotanecessaryconditionforequity-likesecurities.

Perhapssurprisingly,thetheoreticalresultsmostcloselyrelatedtothispaperarecontainedinanalysesofpubliclytradedsecurities.Assumingliquidityisexogenousandthatpricesaresetbycompetitivemarketmakers,BootandThakorshowthatsplittingsecuritiesintoaninformation-sensitivepieceandasaferpiecemayeitherincreaseordecreasetraders’incentivestoproduceinformation.FulghieriandLukinstudyasimilarenvironmentbutsplitthefirm’sclaimsintoapiecesoldtooutsideinvestorsandanotherpiecethatisretained,againanalyzingtheinteractionbetweensecuritydesignandinformationacquisition.

Twoimportantdistinctionssetmyresultsapartfromthesemodelsofpublictrading.First,theirmodelsexogenouslyruleoutsignaling,soitnotpossibletoexaminewhethertraditionalsolutionstoadverseselectionaredominatedand,ifso,underwhatconditions.Second,itisnotclearhowtheresultsofthesepublictradingmodelsmightbeextendedtoentrepreneurialfinancemarketssincetheassumptionthatdrivestheirresults—lossesbyliquiditytraderswithperfectlyinelasticdemand—hasnoobviouscounterpartinanentrepreneurialfinancesetting.

TheeconomyconsistsofentrepreneurswithprojectsrequiringcapitalinvestmentK.Thevalueoffundedprojectsis1withprobabilityπτ,whereτ∈{G,B}isanindicatorofprojectquality,andλ<1otherwise.

FundedprojectshaveexpectedvalueVi=πτ1+（1−πτ）λ.Itisassumedthatλ

EntrepreneurshavereservationvalueV;thatis,contractsareacceptableonlyiftheresidualclaimhasexpectedvalueVorhigher.Inamodelofmaturefirmfinancing,Vismostclearlyinterpretedasthevalueofassets-in-place,becausethisisthecontinuationvalueofthefirmintheabsenceofnewinvestment.Suchaninterpretationisvalidinentrepreneurialsettingsaswellbecausewithoutattractingfinancingtheentrepreneurownstheexistingassetsoutright.Thekeydifferenceisoneofmagnitude.Comparedtomodelsofmaturefirms,inentrepreneurialsettingsthevalueofassets-in-placeissmallrelativetootherparameters.

Thenetpresentvalueofprojects,Vτ−V−K,isassumedtosatisfy

EVG−V−K≥0≥EVB−V−K.

（1）

Equation

（1）justifiesthenomenclature“good”and“bad.”Thenetpresentvalueofaprojectispositiveifandonlyiftheprojectisgood.Finally,itisassumedthatnetpresentvaluessatisfy

θ（EG−V−K）+（1−θ）（EB−V−K）≥0,

（2）

whereθistheproportionofgoodprojectsintheeconomy.Becausenetpresentvaluesarepositive（onaverage）,themodeladmitspoolingequilibrium.

Onesourceofcapitalisanuninformedinvestorwhoconductsamechanicalcreditevaluationbasedonobservablecharacteristics.Thisinvestormaybethoughtofasaproxyforthecompetitivecommercialbankingmarket.Consistentwiththisinterpretation,itwillbeshownthatthisinvestortakesdebtinequilibrium.Briefly,theintuitionisthatwhenoneisuninformed,onesolvestheadverseselectionprobleminthetraditionalway.Asmentionedintheintroduction,thissolutionisdebt.

Analternativesourceofcapitalisaninvestorendowedwithtechnologythatcanevaluateprojectquality.ThisinvestorisreferredtoasaVC.Consistentwiththisidentification,itwillbeshownthattheVCtakeshigh-poweredcontractsinequilibrium.Likewise,itneedstobeshownthattheVCactuallyemploysthescreeningtechnology.Apriori,thisusageisnotobvious.Inparticular,ifthefinancialcontractisverygenerous（ifitleavestheVCwithalargestake）,thenitmaybeprofitabletoforegothecostlyevaluationinfavoroffundingallprojects.Suchanoutcomewouldbenefitbadentrepreneurs,becausetheytoowouldliketoattractfundingprovidedtheycanpoolwithgoodfirmsandtherebyobtainmispricedfinancing.Bylimitingthispooling,costlyduediligenceeffectsatransferfrombadentrepreneurstogoodentrepreneurs,andintheprocess,directsrealinvestmenttowardbetterprojects.

Entrepreneursseekingventurecapitalfinanceforma（randomlyordered）queue,andtheVCsequentiallyevaluatesthem.Foreachentrepreneur,uponpayingacostCtheVCreceivesasignals∈{G,B}