Funding the Competence Life Cycle to Create Value and Allow It to Emerge

Abstract

Traditional debt and equity funding fail to give the required financial support to entrepreneurship. In fact, the legal framework which distinguishes them is based on seniority and asset-based financing. While seniority helps to calibrate the quantity of risk between the two categories, the asset financing fails to sustain the competence value emersion. This is why entrepreneurial finance is perceived as too risky for debt capital, while equity capital investors claim for troubles in controlling the agency costs emerging from the deals. The proposal in this book is focused on contingent claim structured debts to sustain competence-based financing deals. The debt maturity is the key element to design, given its contribution to conclude the entrepreneurial cycle. This required skilled financial intermediaries, which seem to be very rare.