PhD Seminar (Econ)
Date & time
In this paper, Leana Ugrinovska discusses a new form of financing innovations, revenue contingent loans, which are not available on the private market for innovative entrepreneurial firms. Governments can and shall fill in that gap, providing RCLs to innovators charging them a cohort risk premium interest rate. Governments have two advantages for RCLs over private markets: transactional efficiencies and the precedent claimant. Further, I have argued and proved, theoretically, that although the innovator’s efforts are affected with RCLs, and not with debt and equity, if I include the asymmetric information, the RCLs will be in first place in the pecking order theory for young and small high-growth innovative firms.