Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them
Innovation is the main driver of long-term economic growth. The accumulation of capital, whether in the form of physical assets such as plants and equipment, or through better human capital, cannot indefinitely sustain growth unless new products,...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/11/20345973/financing-business-innovation-review-external-sources-funding-innovative-businesses-public-policies-support http://hdl.handle.net/10986/23140 |
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okr-10986-23140 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADMINISTRATIVE COSTS ADVANCED TECHNOLOGY ADVISORY SERVICE AGENCY PROBLEMS ALLOCATION MECHANISM ALLOCATION MECHANISMS AMORTIZATION APPLICATION PROCESS ASSET BASES ASYMMETRIC INFORMATION AVAILABILITY OF CREDIT AVAILABILITY OF FINANCE BANK DEBT BANKING REGULATION BANKRUPTCY BANKS BENEFICIARIES BENEFICIARY BIDS BONDS BORROWER BUDGET ALLOCATION BUSINESS ANGELS BUSINESS INNOVATION BUSINESS MODEL BUSINESS MODELS BUSINESS OPERATIONS BUSINESS PLAN BUSINESS PROCESSES CAPABILITIES CAPABILITY CAPITAL EXPENDITURE CAPITAL EXPENDITURES CAPITAL FUNDS CLAIMANT COLLATERAL COLLECTION OF INFORMATION COMPETITIVENESS COMPLIANCE COSTS CONTRACT ENFORCEMENT CONTRACTUAL OBLIGATIONS COORDINATION FAILURES CORPORATE GOVERNANCE CREDIBILITY CREDIT GUARANTEE CREDIT GUARANTEES CREDIT PROVISION CREDITORS CUSTOMS DEBT FINANCE DEDUCTIBLE DEFAULT RISK DEVELOPING COUNTRIES DISBURSEMENT DIVERSIFICATION DOMAIN DUE DILIGENCE EARNINGS ECONOMIC GROWTH ELIGIBILITY CRITERIA EMERGING ECONOMIES ENTREPRENEUR ENTREPRENEURS EQUIPMENT EQUIPMENT PURCHASES EQUITY FINANCE EQUITY FUNDS EXPENDITURE EXPENDITURES EXPROPRIATION EXTERNAL CAPITAL EXTERNAL FINANCE EXTERNAL FUNDING EXTERNAL FUNDS FINANCIAL CONSTRAINTS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL REGULATION FINANCIAL RESOURCES FINANCIAL SUPPORT FIXED ASSET FIXED CAPITAL FOREIGN DIRECT INVESTMENT GLOBAL KNOWLEDGE GOVERNANCE ISSUES GOVERNMENT BUDGET GOVERNMENT FUNDING GOVERNMENT INTERVENTION GOVERNMENT POLICIES GOVERNMENT SUPPORT GRANT FUNDING GREATER ACCESS GUARANTEE SCHEMES HARDWARE HIGH INTEREST RATES HUMAN CAPITAL HUMAN RESOURCES INCOME TAX INFORMATION ASYMMETRIES INFORMATION TECHNOLOGY INFORMATIONAL ASYMMETRIES INITIAL PUBLIC OFFERINGS INNOVATION POLICY INNOVATIONS INNOVATIVE FINANCIAL INSTRUMENTS INSTITUTIONAL FRAMEWORK INSTRUMENT INTANGIBLE INTANGIBLE ASSET INTANGIBLE ASSETS INTANGIBLES INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY REGIMES INTELLECTUAL PROPERTY RIGHTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNAL FUNDS INVENTIONS INVESTING INVESTMENT IN KNOWLEDGE INVESTOR PROTECTION IP IPO LEGAL PROTECTION LIABILITY LICENSES LIQUIDATION LOAN LOAN GUARANTEE MANAGEMENT SYSTEMS MANUFACTURING MARKET FAILURE MARKET FAILURES MARKET RISK MARKETING MATURITY MOBILE APPLICATION MORAL HAZARD MULTINATIONAL NECESSARY SKILLS NETWORKS NEW BUSINESS NEW TECHNOLOGIES NEW TECHNOLOGY NONPROFIT ORGANIZATIONS ONLINE BUSINESSES OUTSIDE INVESTORS PENSION PENSION FUNDS PHYSICAL ASSETS POLICY DESIGN POLICY ENVIRONMENT POOL OF BORROWERS PORTFOLIOS POTENTIAL INVESTORS PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR FIRMS PRIVATE SECTORS PROCUREMENT PRODUCTION PROCESSES PRODUCTIVITY PROPERTY RIGHTS PROTECTION OF INVESTORS PROTOTYPE PROTOTYPES PROVISION OF CREDIT PUBLIC MARKETS RD RATE OF RETURN REGISTRY REPAYMENT RESULT RESULTS RETURNS RETURNS ON EQUITY REVENUE MODELS RISK SHARING SAVINGS SECURITIES SHAREHOLDER SHAREHOLDER VALUE SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOLAR PANELS SOURCES OF FINANCE STANDARDIZATION STOCK MARKET STOCK MARKETS SYSTEM FAILURE SYSTEM FAILURES TANGIBLE ASSETS TARGETS TAX TAX CONCESSIONS TAX CREDIT TAX CREDITS TAX DEDUCTIONS TAX EXEMPTION TAX INCENTIVE TAX INCENTIVES TAX OBLIGATION TAX OBLIGATIONS TAX RATE TAX SYSTEM TAX SYSTEMS TECHNOLOGICAL INNOVATION TECHNOLOGY RISK TIME FRAME TRAINING FOR ENTREPRENEURS TRANCHES USER USERS USES VENTURE CAPITAL VENTURE CAPITAL FUNDS VOUCHERS WORKING CAPITAL |
| spellingShingle |
ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADMINISTRATIVE COSTS ADVANCED TECHNOLOGY ADVISORY SERVICE AGENCY PROBLEMS ALLOCATION MECHANISM ALLOCATION MECHANISMS AMORTIZATION APPLICATION PROCESS ASSET BASES ASYMMETRIC INFORMATION AVAILABILITY OF CREDIT AVAILABILITY OF FINANCE BANK DEBT BANKING REGULATION BANKRUPTCY BANKS BENEFICIARIES BENEFICIARY BIDS BONDS BORROWER BUDGET ALLOCATION BUSINESS ANGELS BUSINESS INNOVATION BUSINESS MODEL BUSINESS MODELS BUSINESS OPERATIONS BUSINESS PLAN BUSINESS PROCESSES CAPABILITIES CAPABILITY CAPITAL EXPENDITURE CAPITAL EXPENDITURES CAPITAL FUNDS CLAIMANT COLLATERAL COLLECTION OF INFORMATION COMPETITIVENESS COMPLIANCE COSTS CONTRACT ENFORCEMENT CONTRACTUAL OBLIGATIONS COORDINATION FAILURES CORPORATE GOVERNANCE CREDIBILITY CREDIT GUARANTEE CREDIT GUARANTEES CREDIT PROVISION CREDITORS CUSTOMS DEBT FINANCE DEDUCTIBLE DEFAULT RISK DEVELOPING COUNTRIES DISBURSEMENT DIVERSIFICATION DOMAIN DUE DILIGENCE EARNINGS ECONOMIC GROWTH ELIGIBILITY CRITERIA EMERGING ECONOMIES ENTREPRENEUR ENTREPRENEURS EQUIPMENT EQUIPMENT PURCHASES EQUITY FINANCE EQUITY FUNDS EXPENDITURE EXPENDITURES EXPROPRIATION EXTERNAL CAPITAL EXTERNAL FINANCE EXTERNAL FUNDING EXTERNAL FUNDS FINANCIAL CONSTRAINTS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL REGULATION FINANCIAL RESOURCES FINANCIAL SUPPORT FIXED ASSET FIXED CAPITAL FOREIGN DIRECT INVESTMENT GLOBAL KNOWLEDGE GOVERNANCE ISSUES GOVERNMENT BUDGET GOVERNMENT FUNDING GOVERNMENT INTERVENTION GOVERNMENT POLICIES GOVERNMENT SUPPORT GRANT FUNDING GREATER ACCESS GUARANTEE SCHEMES HARDWARE HIGH INTEREST RATES HUMAN CAPITAL HUMAN RESOURCES INCOME TAX INFORMATION ASYMMETRIES INFORMATION TECHNOLOGY INFORMATIONAL ASYMMETRIES INITIAL PUBLIC OFFERINGS INNOVATION POLICY INNOVATIONS INNOVATIVE FINANCIAL INSTRUMENTS INSTITUTIONAL FRAMEWORK INSTRUMENT INTANGIBLE INTANGIBLE ASSET INTANGIBLE ASSETS INTANGIBLES INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY REGIMES INTELLECTUAL PROPERTY RIGHTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNAL FUNDS INVENTIONS INVESTING INVESTMENT IN KNOWLEDGE INVESTOR PROTECTION IP IPO LEGAL PROTECTION LIABILITY LICENSES LIQUIDATION LOAN LOAN GUARANTEE MANAGEMENT SYSTEMS MANUFACTURING MARKET FAILURE MARKET FAILURES MARKET RISK MARKETING MATURITY MOBILE APPLICATION MORAL HAZARD MULTINATIONAL NECESSARY SKILLS NETWORKS NEW BUSINESS NEW TECHNOLOGIES NEW TECHNOLOGY NONPROFIT ORGANIZATIONS ONLINE BUSINESSES OUTSIDE INVESTORS PENSION PENSION FUNDS PHYSICAL ASSETS POLICY DESIGN POLICY ENVIRONMENT POOL OF BORROWERS PORTFOLIOS POTENTIAL INVESTORS PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR FIRMS PRIVATE SECTORS PROCUREMENT PRODUCTION PROCESSES PRODUCTIVITY PROPERTY RIGHTS PROTECTION OF INVESTORS PROTOTYPE PROTOTYPES PROVISION OF CREDIT PUBLIC MARKETS RD RATE OF RETURN REGISTRY REPAYMENT RESULT RESULTS RETURNS RETURNS ON EQUITY REVENUE MODELS RISK SHARING SAVINGS SECURITIES SHAREHOLDER SHAREHOLDER VALUE SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOLAR PANELS SOURCES OF FINANCE STANDARDIZATION STOCK MARKET STOCK MARKETS SYSTEM FAILURE SYSTEM FAILURES TANGIBLE ASSETS TARGETS TAX TAX CONCESSIONS TAX CREDIT TAX CREDITS TAX DEDUCTIONS TAX EXEMPTION TAX INCENTIVE TAX INCENTIVES TAX OBLIGATION TAX OBLIGATIONS TAX RATE TAX SYSTEM TAX SYSTEMS TECHNOLOGICAL INNOVATION TECHNOLOGY RISK TIME FRAME TRAINING FOR ENTREPRENEURS TRANCHES USER USERS USES VENTURE CAPITAL VENTURE CAPITAL FUNDS VOUCHERS WORKING CAPITAL World Bank Group Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| description |
Innovation is the main driver of
long-term economic growth. The accumulation of capital,
whether in the form of physical assets such as plants and
equipment, or through better human capital, cannot
indefinitely sustain growth unless new products, services,
processes, and/or business models are developed and
implemented. This paper describes the actors involved and
the types of funding available at different stages of the
innovation process, the rationales for public intervention,
and the advantages and disadvantages of some of the most
commonly used policy instruments. Innovation activities are
more difficult to finance than other types of investment for
several reasons. Innovation produces an intangible asset
that does not typically constitute accepted collateral to
obtain external funding. Also, the technological and market
uncertainty of innovation activities makes the returns to
investment highly uncertain, creating significant problems
for the standard risk adjustment methods used by providers
of funds. This paper uses a streamlined version of an
innovation process with three stages to categorize the
different sources of finance available; in reality,
considerable crossover takes places among instruments
because innovation processes are not discrete. |
| format |
Working Paper |
| author |
World Bank Group |
| author_facet |
World Bank Group |
| author_sort |
World Bank Group |
| title |
Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| title_short |
Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| title_full |
Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| title_fullStr |
Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| title_full_unstemmed |
Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them |
| title_sort |
financing business innovation : review of external sources of funding for innovative businesses and public policies to support them |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/11/20345973/financing-business-innovation-review-external-sources-funding-innovative-businesses-public-policies-support http://hdl.handle.net/10986/23140 |
| _version_ |
1764453017944326144 |
| spelling |
okr-10986-231402021-04-23T14:04:13Z Financing Business Innovation : Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them World Bank Group ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADMINISTRATIVE COSTS ADVANCED TECHNOLOGY ADVISORY SERVICE AGENCY PROBLEMS ALLOCATION MECHANISM ALLOCATION MECHANISMS AMORTIZATION APPLICATION PROCESS ASSET BASES ASYMMETRIC INFORMATION AVAILABILITY OF CREDIT AVAILABILITY OF FINANCE BANK DEBT BANKING REGULATION BANKRUPTCY BANKS BENEFICIARIES BENEFICIARY BIDS BONDS BORROWER BUDGET ALLOCATION BUSINESS ANGELS BUSINESS INNOVATION BUSINESS MODEL BUSINESS MODELS BUSINESS OPERATIONS BUSINESS PLAN BUSINESS PROCESSES CAPABILITIES CAPABILITY CAPITAL EXPENDITURE CAPITAL EXPENDITURES CAPITAL FUNDS CLAIMANT COLLATERAL COLLECTION OF INFORMATION COMPETITIVENESS COMPLIANCE COSTS CONTRACT ENFORCEMENT CONTRACTUAL OBLIGATIONS COORDINATION FAILURES CORPORATE GOVERNANCE CREDIBILITY CREDIT GUARANTEE CREDIT GUARANTEES CREDIT PROVISION CREDITORS CUSTOMS DEBT FINANCE DEDUCTIBLE DEFAULT RISK DEVELOPING COUNTRIES DISBURSEMENT DIVERSIFICATION DOMAIN DUE DILIGENCE EARNINGS ECONOMIC GROWTH ELIGIBILITY CRITERIA EMERGING ECONOMIES ENTREPRENEUR ENTREPRENEURS EQUIPMENT EQUIPMENT PURCHASES EQUITY FINANCE EQUITY FUNDS EXPENDITURE EXPENDITURES EXPROPRIATION EXTERNAL CAPITAL EXTERNAL FINANCE EXTERNAL FUNDING EXTERNAL FUNDS FINANCIAL CONSTRAINTS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL REGULATION FINANCIAL RESOURCES FINANCIAL SUPPORT FIXED ASSET FIXED CAPITAL FOREIGN DIRECT INVESTMENT GLOBAL KNOWLEDGE GOVERNANCE ISSUES GOVERNMENT BUDGET GOVERNMENT FUNDING GOVERNMENT INTERVENTION GOVERNMENT POLICIES GOVERNMENT SUPPORT GRANT FUNDING GREATER ACCESS GUARANTEE SCHEMES HARDWARE HIGH INTEREST RATES HUMAN CAPITAL HUMAN RESOURCES INCOME TAX INFORMATION ASYMMETRIES INFORMATION TECHNOLOGY INFORMATIONAL ASYMMETRIES INITIAL PUBLIC OFFERINGS INNOVATION POLICY INNOVATIONS INNOVATIVE FINANCIAL INSTRUMENTS INSTITUTIONAL FRAMEWORK INSTRUMENT INTANGIBLE INTANGIBLE ASSET INTANGIBLE ASSETS INTANGIBLES INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY REGIMES INTELLECTUAL PROPERTY RIGHTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNAL FUNDS INVENTIONS INVESTING INVESTMENT IN KNOWLEDGE INVESTOR PROTECTION IP IPO LEGAL PROTECTION LIABILITY LICENSES LIQUIDATION LOAN LOAN GUARANTEE MANAGEMENT SYSTEMS MANUFACTURING MARKET FAILURE MARKET FAILURES MARKET RISK MARKETING MATURITY MOBILE APPLICATION MORAL HAZARD MULTINATIONAL NECESSARY SKILLS NETWORKS NEW BUSINESS NEW TECHNOLOGIES NEW TECHNOLOGY NONPROFIT ORGANIZATIONS ONLINE BUSINESSES OUTSIDE INVESTORS PENSION PENSION FUNDS PHYSICAL ASSETS POLICY DESIGN POLICY ENVIRONMENT POOL OF BORROWERS PORTFOLIOS POTENTIAL INVESTORS PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR FIRMS PRIVATE SECTORS PROCUREMENT PRODUCTION PROCESSES PRODUCTIVITY PROPERTY RIGHTS PROTECTION OF INVESTORS PROTOTYPE PROTOTYPES PROVISION OF CREDIT PUBLIC MARKETS RD RATE OF RETURN REGISTRY REPAYMENT RESULT RESULTS RETURNS RETURNS ON EQUITY REVENUE MODELS RISK SHARING SAVINGS SECURITIES SHAREHOLDER SHAREHOLDER VALUE SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOLAR PANELS SOURCES OF FINANCE STANDARDIZATION STOCK MARKET STOCK MARKETS SYSTEM FAILURE SYSTEM FAILURES TANGIBLE ASSETS TARGETS TAX TAX CONCESSIONS TAX CREDIT TAX CREDITS TAX DEDUCTIONS TAX EXEMPTION TAX INCENTIVE TAX INCENTIVES TAX OBLIGATION TAX OBLIGATIONS TAX RATE TAX SYSTEM TAX SYSTEMS TECHNOLOGICAL INNOVATION TECHNOLOGY RISK TIME FRAME TRAINING FOR ENTREPRENEURS TRANCHES USER USERS USES VENTURE CAPITAL VENTURE CAPITAL FUNDS VOUCHERS WORKING CAPITAL Innovation is the main driver of long-term economic growth. The accumulation of capital, whether in the form of physical assets such as plants and equipment, or through better human capital, cannot indefinitely sustain growth unless new products, services, processes, and/or business models are developed and implemented. This paper describes the actors involved and the types of funding available at different stages of the innovation process, the rationales for public intervention, and the advantages and disadvantages of some of the most commonly used policy instruments. Innovation activities are more difficult to finance than other types of investment for several reasons. Innovation produces an intangible asset that does not typically constitute accepted collateral to obtain external funding. Also, the technological and market uncertainty of innovation activities makes the returns to investment highly uncertain, creating significant problems for the standard risk adjustment methods used by providers of funds. This paper uses a streamlined version of an innovation process with three stages to categorize the different sources of finance available; in reality, considerable crossover takes places among instruments because innovation processes are not discrete. 2015-11-24T22:51:54Z 2015-11-24T22:51:54Z 2012 Working Paper http://documents.worldbank.org/curated/en/2015/11/20345973/financing-business-innovation-review-external-sources-funding-innovative-businesses-public-policies-support http://hdl.handle.net/10986/23140 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research |