Ueda, MasakoUniversitat Pompeu Fabra. Departament d'Economia i Empresa2017-07-262017-07-262000-11-01Journal of Finance 59(2), 601-621, 2004http://hdl.handle.net/10230/845Why do some start-up firms raise funds from banks and others from venture capitalists? To answer this question, I develop a model of start-up financing when intellectual property rights are not well protected. The upside of VC financing is that the VC understands the business better than a bank. The downside, however, is that the VC may steal the idea and use it himself. The results of the model are consistent with empirical regularities on start-up financing. The model implies that the characteristics of the firms financing from venture capitalists are low-collateral, high-growth and high-profitability. The model also suggests that the tighter protection of intellectual property rights contributes to the recent dramatic growth of the US venture capital industry.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPaperCollateralIntellectual-propertyVenture capitalFinance and Accountinginfo:eu-repo/semantics/openAccess