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The paper revisits the success case of Boston Route 128 in commercializing technology. The study applies the concept of industrial clusters to explain the development of technologically sophisticated region of Boston Route 128. Boston Route 128 has transformed its structure from the minicomputer and microprocessor-based technology industry in the 1980s to biotechnology industry in the late 1990s and 2000s. It is argued that the successful commercialization process of Boston Route 128 is rooted in innovation, entrepreneurial management and the policy towards technology commercialization. To consider the argument, the paper proposes the cluster model to explain the strengths of Boston Route 128 in biotech clusters. It represents a model of the universities working with industries to form a cluster of high technology based firms. The venture capital accelerates the process of technology commercialization, giving rise to a new Boston model of innovation management. Policy makers may use the Boston model as a benchmark to evaluate their performance in supporting Hi-Tech industries.

High-technology innovation often takes place in small, independent startups; it can also take place in the research-and-development facilities of large, established corporations. A third possibility is that innovation will take place in a hybrid of these two ideal types, for example via corporate venture capital (CVC) or via distribution channel agreements. Using detailed data on a large number of high-technology firms located in the US, Western Europe and Israel, we test a set of predictions about innovation and firm boundaries that flow from previous empirical studies and formal models. Our central research questions relate to how the boundaries of the firm are affected by the level of competition in product markets, portfolio firm research intensity, national institutions, cash flow risk, innovation risk by rivals, and managerial resources. We find some evidence that hybrid organization is more likely (relative to stand-alone startup status) for more established firms (with more employees and larger revenues). Hybrid organization is also more likely when competition is declining, less likely when competition is static, and no more likely when competition is growing. In addition, our results are consistent with previous findings that CVC is associated with herding behavior as opposed to participation in the most innovative industry segments. Hybrid organization is associated with patent possession by the high-tech startup, but CVC partners are less concerned than other investors (VCs) that the patents provide useful barriers to entry. Results pertaining to cash flow risk, research intensity, management team, and innovation risk by rivals were neither consistent in terms of sign nor robust to various specifications.

Innovation permeates the financial sector by means of collaborative finance. Crowdfunding, as an activity based on peer-to-peer lending through a platform, is an innovative way to finance start-ups. A better understanding is needed of the motivational factors of backers to participate in crowdfunding campaigns. This study used the empirical data to investigate this issue, paying attention to the participation in four platform types (reward-based, lending-based, equity-based, and donation-based crowdfunding). Results indicate that the extrinsic and intrinsic motivators are constructs that drive actual behaviors. Extrinsic motivators are the prevalent driver of participants in crowdfunding, regardless of which platform type is used.

This study applies the concept of industrial clusters to explain the development of technologically sophisticated region of Boston Route 128. It is argued that the success of Boston, Massachusetts, is rooted in innovation, entrepreneurial management and the policy towards technology commercialisation. To consider the argument, the paper proposes the cluster model to capture the specific features of Boston Route 128. It represents a model of the universities working with industries to form a cluster of high-technology-based firms. The venture capital accelerates the process of technology commercialisation, giving rise to a new Boston model of innovation management. Policy makers may use the Boston model as a benchmark to evaluate their performance in supporting high-tech industries.

We investigate the effectiveness of public financing programmes for university spin-offs (USOs) in their seed stage. These ventures often identify groundbreaking innovations which are not commercialised due to financing problems. USOs show characteristics which expose them even more to the typical financing gap ventures face and for which public programmes aim to provide relief. We test on a sample of 127 German USOs whether these ventures’ characteristics increase the selection for public programmes and whether these positively affect the ventures’ development. The results indicate that only certain characteristics of USOs are decisive for receiving public support. However, the supported spin-offs have an increased likelihood of facing financial difficulties after the phase of support and do not have a higher investment readiness for finding an external investor.

Microfinance institutions (MFIs) have been criticized for charging high interest rates on loans. Building on multiple-principal agency theory, we argue that when an MFI acquires proprietary information about its clients through monitoring, it gains an information advantage over other lenders enabling it to extract rents by charging higher interest rates. Using data from 712 MFIs across 62 countries from 2010 to 2018, we find this to be the case. Furthermore, we find that MFIs that make more relationship-based loans, operate in less competitive markets, and those driven by for-profit commercial banking logic are more likely to extract even greater rents.

Among recent FinTech developments, new digital ledger technologies have the potential to facilitate the financing of entrepreneurial projects, as they can enable different and better financing contracts. Costly verification is arguably one of the main reasons why bank financing and debt contracts have been traditionally so prevalent, with investors not being easily assured that entrepreneurs will report accurately future cash flows generated. The adoption of digital ledger technologies can mitigate this friction, by offering a better tool to maintain a shareable history of transactions, which not only reduces verification costs but also further enables “smart contracts” which can benefit from adjusting optimally to incoming data. Such smart contracts (the optimal form of which is found to be a dynamically adjusting profit-sharing rule) dominate less flexible debt and equity contracts that do not give the right incentives for the entrepreneur to continue to try to generate sales, especially when there is learning from data. There remain unresolved issues around digital ledger technology, especially with “proof-of-work” systems, which create limitations for realizing its potential. Permissioned systems may solve some of these problems but remain at an experimental stage. Third-party platforms that collect and share information are another way to reduce the verification costs faced by individual investors, and there seems to be a close link between the evolution toward “smart” contracts and crowdfunding. The appropriate supporting regulation still needs to be established and will have to tackle issues that are quite novel compared to what banking regulations and securities markets regulations have had to address.

This chapter aims to better understand how a young company can use its funding trajectory as the basis for its development trajectory. Financial players provide capital and also meet other business needs, such as the need for knowledge, legitimacy, credibility, and visibility at local, national, and international levels. These needs evolve over time, and each financial partner’s interactions with the company help create a specific trajectory (Bessière et al., 2020) that will allow the company to develop.