Author(s)

Guanghui Hou^*, Jianguo Zhang

Affiliation(s)

School of Business, Guangdong University of Foreign Studies, Guangzhou, 510000, China

Corresponding Author

Guanghui Hou

ABSTRACT

Venture capital and bank are different financing channels for innovation. The selection between them depends on start-ups' considerations about holding all of the shares and enjoying non-financial value-added services. It is only when venture capital can provide non-financial value-added services that  such institutions are the best choice for new ventures to get support from, and venture capitalists are now more patient than bank with firms' technological innovation. Otherwise, if entrepreneurs take the point of view that holding all of the shares is very important, the opposite results will come into being, and bank becomes the more popular financing channel for innovation. Based on the comparison of British-American and German-Japanese experience in financing innovation, along with taking China's economic development background into account, proposals concerning determinants of financing channels for innovation including geographical distance, government policies, and social networks are put forward to  create a better environment for firms' financing practice of innovation.

KEYWORDS

Venture capital; Bank; Non-financial Value-added services; Equity integrity

CITE THIS PAPER

Hou Guanghui, Zhang Jianguo. Will venture capital be more patient than bank with firm innovation: based on the contingent analysis between non-financial value-added services. Eurasia Journal of Science and Technology. 2019, 1(1): 10-15.

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