1、本科毕业论文（设计） 外 文 翻 译 题 目 大学生创业融资渠道研究 专 业 财 务 管 理 Entrepreneurial Financing The financing of startups entails potentially extreme adverse selection costs given the absent track record of the firms seeking capital, and given the risky nature of the industries in which many of them operate. Exacerbating
2、the problem, this scenario often involves an innovator who has extensive technical knowledge but has neither the accumulated reputation nor the bondable wealth necessary to convey this information credibly. Barry characterizes venture capital as having evolved precisely to fill this startup financin
3、g niche: At the level of small, risky ventures, access to capital markets is restricted. Not all entrepreneurs can self-finance their projects, and not all can find bankers or angels who will carry the shortfall. Venture capitalists offer them a source of funds that is specifically designed for use
4、in risky settings. The venture capitalists themselves perform due diligence prior to investing, and information gleaned in that process can greatly reduce the adverse selection problem. This outlook raises several questions. Why is it assumed that banks cannot (or choose not to) perform the same lev
5、el of due diligence as venture capitalists (VCs)? In what sense is venture capital “designed” for risky settings? The puzzle deepens when one notes that straight debt is typically advocated as a solution to the adverse selection problem whereas in practice VCs often hold convertible preferred equity
6、. Indeed, a defining characteristic of the venture capital market is that contracts are fairly high-powered in the sense that expected payoffs come disproportionately from the equity component or “upside”. These questions can be addressed by reflecting upon the costly due diligence to which Barry re
7、fers. By directly revealing the projects quality, due diligence reduces information asymmetry between entrepreneurs and the VC. By contrast, if quality were signaledthe traditional solution to the adverse selection problemcostly due diligence would be unnecessary since there would be no more informa
8、tion to convey. In otherwise, either signaling or costly due diligence can solve the adverse selection problem. The two mechanisms are substitutes； the question then becomes which is more cost-effective. The first contribution of the paper is to show that signaling can be prohibitively expensive in
9、entrepreneurial financing markets, and so costly due diligence dominates. The “cost” of signaling is driven by the incentives of bad firms to pool. Yet, for startups, if funding is not obtained then the firm may have almost no value. With such low reservation values, bad entrepreneurs attempt to poo
10、l at nearly any cost. As the analysis shows, securities is unattractive enough to drive out bad entrepreneursand thus to serve as a credible signaltend to be unattractive to good entrepreneurs as well. Costly due diligence emerges as the preferred solution. As testament to the empirical importance o
11、f due diligence costs in venture capital markets, Fried and Hans characterize the VC funding process as composed of six distinct, progressively rigorous stages of screening. This due diligence takes an average of 97 days to complete even before the first round of funding is initiated. The majority o
12、f funding proposals do not successfully pass through the first screen, let alone subsequent screens, and the full process is described as “much more involved in bank loan reviews. The second contribution of the paper is to illustrate a link between costly due diligence and high-powered (or equity-li
13、ke) financial contracts. The intuition behind this link is simple. By definition, low-powered contracts are safe； i.e., expected payoffs vary little across firms. High-powered contracts magnify the differential in payoff between funding good and bad projects, and hence magnify the incentives to scre
14、en out bad projects. In effect, high-powered contracts make the VC bear the cost of choosing entrepreneurs unwisely. Therefore high-powered contracts encourage due diligence. To summarize, this model is designed to make three simple points: (1) upside sharing is to be expected given costly evaluatio
15、n, (2) such costly evaluations serve as a substitute traditional solutions to the adverse selection problem, and (3) traditional solutions are dominated for parameterizations of the model that correspond to venture capital markets. Following the path-breaking empirical work of Saar, a theoretical li
16、terature on VC contract design emerged. One common feature of these papers is that they rationalize the optimality of convertible securities. A second common feature of these models is the admission of agency costs. For example, VCs and entrepreneurs may have different preferences regarding project
17、risk or exit strategy. In part, the literatures reliance on agency costs owes to a widespread belief in their empirical relevance. It is also presumably related to the aforementioned consensus: since debt is considered the optimal response to adverse selection, non-debt securities must imply the pre
18、sence of another market friction. On the other hand, it is clear how agency costs could lead to equity-like securities. Conflicts-of-interest over future actions are mitigated by granting both parties roughly symmetrical payoffs, which leads to upside-sharing. Of course, the omission of agency probl
19、ems from the current model is not intended to suggest that they are unimportant empirically. Rather, the lesson is that agency costs are not a necessary condition for equity-like securities. Perhaps surprisingly, the theoretical results most closely related to this paper are contained in analyses of
20、 publicly traded securities. Assuming liquidity is exogenous and that prices are set by competitive market makers, Boot and Thakor show that splitting securities into an information-sensitive piece and a safer piece may either increase or decrease traders incentives to produce information. Fulghieri
21、 and Lukin study a similar environment but split the firms claims into a piece sold to outside investors and another piece that is retained, again analyzing the interaction between security design and information acquisition. Two important distinctions set my results apart from these models of public trading. First, their models exogenously rule out signaling, so it not possible to
