Financing of startups
New forms of start-up financing, esp. crowdfunding and Initial Coin Offerings (ICOs).
In recent years, new forms of start-up financing have become established. The following article provides an overview:
- Block, J., Colombo, M., Cumming, D., Vismara, S. (2018). New players in entrepreneurial finance and why they are there. Small Business Economics, 50(2): 239-250.
(article - open access)
Initial Coin Offerings (ICOs) represent one of the latest developments in the field of startup financing. ICOs are particularly suitable for financing highly innovative startups in the blockchain sector. ICO investors usually finance companies in cryptocurrencies such as Bitcoin. Blockchain technology serves as the settlement platform. The backers are remunerated with so-called tokens. These "tokens" can be profit shares, a specific product, or even unusual forms of benefits or uses. In our previously published articles, we look at the success factors of ICOs, the motives of ICO investors and the development of ICOs.
Block, J.H., Groh, A., Hornuf, L., Vanacker, T., Vismara, S. (2021). The entrepreneurial finance markets of the future: a comparison of crowdfunding and initial coin offerings. Small Business Economics. 57(2): 865-882.
(article - open access)Fisch, C., Masiak, C., Vismara, S., Block, J. (2021). Motives and profiles of ICO investors. Journal of Business Research. 125(3): 564-576.
(article, working paper version)Masiak, C., Block, J., Masiak, T., Neuenkirch, M., Pielen, K. (2020). Initial Coin Offerings (ICOs): market cycles and relationship with Bitcoin and Ether. Small Business Economics, 55(4): 1113-1130.
(article - open access)Fisch, C. (2019). Initial coin offerings (ICOs) to finance new ventures. Journal of Business Venturing, 34(1): 1-22.
(article, working paper version)
Crowdfunding is an alternative form of financing in which a large number of investors (crowd) finance a project or a company via the Internet, usually with small amounts. The Chair of Business Management is particularly concerned with crowdfunding as a financing alternative for founders and entrepreneurs (crowdinvesting or equity-based crowdfunding). The empirical research projects conducted so far deal with the question of how information asymmetries can be reduced by the companies seeking capital in order to thus increase the crowd's willingness to invest.
Maier L., Baccarella C.V., Block J., Wagner T., Voigt K.-I. (in press). The legitimization effect of crowdfunding success: a consumer perspective. Entrepreneurship Theory and Practice.
(article)Iurchenko, D., Petty, J., Block, J. (in press). The effect of online discussion boards on equity crowdfunding dynamics. Journal of Small Business Management.
(article)Iurchenko, D., Petty, J. S., Shang, C. S., Block, J. (2020). Enabling equity crowdfunding: understanding the legal approval process across four countries. International Review of Entrepreneurship. 18(2): 221-254.
(article)Zaggl, M., Block, J. (2019). Do small funding amounts lead to reverse herding? A field experiment in reward-based crowdfunding. Journal of Business Venturing Insights. 13.
(article)Block, J., Hornuf, L., Moritz, A. (2018). Which updates during a crowdfunding campaign increase crowd participation? Small Business Economics, 50(1): 3-27.
(article - open access, working paper version)Moritz, A., Block, J. H. (2015). Crowdfunding: A literature review and research directions. In J. H. Block, A. Kuckertz (Series Eds.), D. Brüntje, O. Gajda (Vol. Eds.), FGF Studies in Small Business and Entrepreneurship: Vol. 1. Crowdfunding in Europe – State of the Art in Theory and Practice. Cham: Springer Science & Business Media, pp. 25-53.
(working paper version)
Moritz, A., Block, J., Lutz, E. (2015). Investor communication in equity-based crowdfunding: A qualitative-empirical study. Qualitative Research in Financial Markets, 7(3): 309-342.
(article, working paper version)Moritz, A. (2015). Financing of small and medium-sized enterprises in Europe – financing patterns and ‘crowdfunding’. Dissertation.
(link)Block, J., Moritz, A. (2014). Crowdfunding als Finanzierungsalternative von Gründungen aus der Wissenschaft. In: Bundesministerium für Wirtschaft und Energie, 15 Jahre EXIST – EXIST-Tagungsband 2014, pp- 65-70.
(article)Moritz, A., Block, J. (2014). Crowdfunding und Crowdinvesting: State-of-the-Art der wissenschaftlichen Literatur. Zeitschrift für KMU und Entrepreneurship, 62(1): 57-89
(article, working paper version)
Bootstrapping
Bootstrapping is a method of start-up financing, especially for resource-constrained companies in the start-up phase. We investigate which companies make use of bootstrapping in crisis situations.
Block, J., Fisch, C., Hirschmann, M. (in press). The determinants of bootstrap financing in crises: evidence from entrepreneurial ventures in the COVID-19 pandemic. Small Business Economics.
(article - open access)
SME Financing
The professorship studies the specifics of financing small and medium-sized enterprises (SMEs). One focus is on discovering financing patterns of SMEs in Europe. In another project, we investigate the financing of micro firms.
Masiak, C., Moritz, A., Lang, F., Kraemer-Eis, H. (2019). How do micro firms differ in their financing patterns from larger SMEs? Venture Capital. An International Journal of Entrepreneurial Finance, 21(4): 301-325.
(article)Moritz, A., Block, J., Heinz, A. (2016). Financing patterns of European SMEs - An empirical taxonomy. Venture Capital–an International Journal of Entrepreneurial Finance, 18(2), 115-148.
(article, working paper version)Moritz, A. (2015). Financing of small and medium-sized enterprises in Europe – financing patterns and ‘crowdfunding’. Dissertation.
(link)
(Classic) venture capital, especially from business angels and venture capital companies
Venture capitalists such as venture capital companies or business angels represent an important external source of financing for young companies to fund growth and further innovation. For venture capitalists, one of the key tasks is to make decisions about investing in these young companies. However, there is great undercertainty about the success of such companies. In our research, we investigate the decision criteria of venture capitalists in their investments, the syndication behavior as well as the development of the financed companies following the receipt of venture capital.
Moritz, A., Diegel, W., Block, J., Fisch, C. (2022). VC investors’ venture screening: the role of the decision maker’s education and experience. Journal of Business Economics. 92(1), 27-63.
(article - open access)Block, J. Fisch, C., Vismara, S., Andres, R. (2019). Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels, and family offices. Journal of Corporate Finance, 58: 329-352.
(article - open access)Block, J., Fisch, C., Obschonka, M., Sandner, P. (2019). A personality perspective on business angel syndication. Journal of Banking and Finance, 100, 306-327.
(article, working paper version)- Ter Wal, A., Alexy, O., Block, J., Sandner, P. (2016). The best of both worlds: the benefits of specialized-brokered and diverse-closed syndication networks for new venture success. Administrative Science Quarterly, 61(3), 393-432.
(article - open access)
Zhou, H., Sandner, P., Martinelli, L., Block, J. (2016). Patents, trademarks, and their complementarity in venture capital funding. Technovation, 47: 14-22.
(article, working paper version)Block, J., De Vries, G., Schumann, J., Sandner, P. (2014). Trademarks and venture capital valuation. Journal of Business Venturing, 29(4): 453-484.
(article, working paper version)Alexy, O., Block, J, Sandner, P., Ter Wal, A. (2012). Social capital of venture capitalists and start-up funding. Small Business Economics, 39(4): 835-851.
(article, working paper version)Block, J., de Vries, G. Sandner, P. (2012). Venture capital and the financial crisis: an empirical study across industries and countries. in: D. Cumming (ed.), The Oxford Handbook of Venture Capital, Oxford University Press, pp. 37-61.
(working paper version)De Vries, G., Block, J. (2011). Venture capital syndication in times of economic crisis. Venture Capital–an International Journal of Entrepreneurial Finance, 13(3): 195-213.
(article, working paper version)Jell, F., Block, J., Henkel, F. (2011). Innovativität als Kriterium bei Venture Capital Entscheidungen. Kredit und Kapital, 44(4): 509-541.
(article, working paper version)Block, J., Sandner, P. (2011). Venture capital funding in the middle of the year 2011: are we back to pre-crisis boom levels? Strategic Change. Briefings in Entrepreneurial Finance, 20(5-6): 161-169.
(article, working paper version)Block, J., Sandner, P. (2009). What is the effect of the financial crisis on venture capital-financing? Empirical evidence from US internet start-ups. Venture Capital–an International Journal of Entrepreneurial Finance, 11(4): 295-309.
(article, working paper version)Block, J., Sandner, P. (2009). Wie wirkt sich die Finanzkrise auf Venture-Capital-Finanzierungen aus? FINANZ BETRIEB, 7/8: 427-432.
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